Question

Price mechanism is the instrument for determining the level of _________.

• A. production and consumption
• B. savings and investment
• C. technological development
• D. all of the above

Answer 1

The correct option is D all of the above

Price mechanism refers to the mechanism where price directs the flow of goods and services in the market as it directs the supply by the production sector i.e supply will increase if price increases and vice-versa and the demand sector i.e demand will increase if price decreases and vice-versa. Therefore, it determines the overall production in the economy that also signifies technological development and investment done. Moreover, it determines the consumption expenditure in the economy through aggregate demand which also signifies the overall savings in the economy.