Question

Which kind of economic system does a capitalist country have?

Answer 1

ANSWER: The correct answer is B.

EXPLAINATION: A free market economic system is the one in which the economic decisions and the prices of goods and services are derived from the interactions of economic agents (households, firms and governments) in the markets.

Such interactions are governed by two main market forces: the demand-side which represents the desires of consumers, who need to buy products to satisfy their needs taking into account their preferences and possible budget constraints. On the other hand, the supply-side is constituted by producers who offer those products and services in the markets, aiming to gain a profit in those sales. The transactions undertake between the two sides, governed by the incentives of each side, determine the quantity and value of the goods and services commercialized in the economy.