Multiple Choice
In the short run, an increase in the policy rate will cause:
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0. Basic Principles of Economics
Introduction to Economics
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
In a free-enterprise system, consumers decide:
A
the prices at which goods and services must be sold
B
how much profit firms are allowed to earn
C
the amount of taxes the government collects from businesses
D
which goods and services will be produced by expressing their preferences through purchases
Verified step by step guidance1
Understand the role of consumers in a free-enterprise system: Consumers influence the market primarily through their purchasing decisions, which signal demand for various goods and services.
Recognize that consumers do not directly set prices, profits, or taxes; instead, these are outcomes influenced by market forces and government policies.
Identify that by choosing which goods and services to buy, consumers effectively determine what products firms will produce to meet demand.
Express this concept by stating that consumer preferences, revealed through their purchases, guide firms on what to supply in the market.
Summarize that in a free-enterprise system, the correct statement is that consumers decide which goods and services will be produced by expressing their preferences through purchases.
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