With reference to the circular flow of income,how is the allocation of resources largely decided?
A)by central authorities only
B)by central authorities and firms only
C)by firms and individuals acting independently
D)by political parties and firms only
E)by individuals only

Question

Quizplus · Accepted Answer

In a market economy, the allocation of resources is largely decided by firms and individuals acting independently. Firms make decisions about what goods and services to produce, how much to produce, and what resources to use based on the signals they receive from the market, such as prices and consumer demand. Individuals make choices about how to allocate their own resources, such as labor and savings, based on their own preferences and incentives. While central authorities, political parties, and other entities may play a role in shaping the overall economic environment, in a market economy the allocation of resources is largely driven by decentralized decision-making by firms and individuals.

With Reference to the Circular Flow of Income,how Is the Allocation