Question

In a free economy the central problem facing a society is solved by ______.

• A. market forces or price mechanism
• B. central planning committee
• C. central bank
• D. parliament

Answer 1

Answer: (A)

market forces or price mechanism

In a free economy, the central problem facing society is solved by the market forces or the price mechanism. Price-mechanism is an important feature of this economy. In this, the prices are determined by the free interaction of the forces of demand and supply. It is an automatic self-regulating mechanism that runs with the motive of profit.