Question

A free market economy solves its central problems through _________.

• A. planning authority
• B. market mechanism
• C. both of the above
• D. none of the above

Answer 1

The correct option is B market mechanism

The market mechanism plays an important role in the free-market economy as it is a mechanism by which the use of money exchanged by buyers and sellers with an open and understood system of value and time trade-offs in a market tends to optimize the distribution of goods and services in at least some ways. When a free market economy works, it both rewards and perpetuates innovation and hard work with success. The advantages of a free market economy lead to economic growth and expansion during the business cycle.