What is produced and consumed in the economy is determined jointly by
A) standards of living and business cycles.
B) the economy's productive capacity and the preferences of consumers.
C) the behaviour of business managers and government policies.
D) government policies and the economy's productive capacity.
E) the preferences of consumers and the behaviour of business managers.

Question

Quizplus · Accepted Answer

The economy's productive capacity (what can be produced) sets an upper limit on what can be supplied, while the preferences of consumers determine the demand for goods and services. Thus, what is produced and consumed in the economy is determined jointly by the economy's productive capacity and the preferences of consumers.

What Is Produced and Consumed in the Economy Is Determined