Which of the following is one of the five fundamental questions that every economy must answer?

• A. How can inflation be completely eliminated?
• B. What goods and services should be produced?
• C. How should profits be distributed among citizens?
• D. What is the optimal level of government spending?

Answer: (B)

Verified step by step guidance

1. Understand that every economy must address fundamental questions to allocate scarce resources efficiently.
2. Recall the five fundamental economic questions, which typically include: What goods and services should be produced? How should they be produced? For whom should they be produced? How to allocate resources? And how to accommodate change?
3. Identify that the question 'What goods and services should be produced?' directly relates to deciding the allocation of resources to different products and services, which is a core economic problem.
4. Recognize that questions about eliminating inflation, distributing profits, or determining government spending levels are important but are not among the five fundamental economic questions that every economy must answer.
5. Conclude that the correct fundamental question from the options given is 'What goods and services should be produced?' because it addresses the basic economic problem of resource allocation.