The Decision About What Goods and Services Will Be Produced

question 1

Multiple Choice

The decision about what goods and services will be produced made in a centrally-planned economy is made by

• A)lawmakers in the government deciding on what will be produced.
• B)workers deciding to produce only what the boss says must be produced.
• C)producers deciding what society wants most.
• D)consumers and firms choosing which goods and services to buy or produce.
• E)consumers dictating to firms what they need most.

---

Definitions:

Spending Multiplier

A concept in economics that refers to the ratio of a change in output to the initial change in spending that brought it about, indicating the ripple effect of spending through the economy.

Price Level

An index of the average prices of goods and services in an economy over time, indicating inflation or deflation trends.

Aggregate Demand Curve

Represents the total demand for all goods and services in an economy at various price levels, showing an inverse relationship between price level and aggregate demand.

Interest Rate

The cost of borrowing money, usually expressed as a percentage of the total amount loaned.