210k views
2 votes
In a market economy, capital resources are primarily allocated by _______.

A) governments
B) corporation CEO's
C) financial markets
D) investment bankers

User Harikrish
by
7.4k points

1 Answer

2 votes

Final answer:

Capital resources in a market economy are primarily allocated by financial markets, exemplified by the New York Stock Exchange, involving various market participants and financial instruments like stocks and bonds.

Step-by-step explanation:

In a market economy, capital resources are primarily allocated by financial markets. The New York Stock Exchange is a prime example of a financial market where various entities participate, including firms in the financial market, firms in the labor market, firms in the goods market, households in the goods market, and households in the financial market. Financial markets enable the inflow of funds from suppliers of financial capital, such as households, to be transformed into the funds desired by demanders of financial capital - for instance, when a corporation issues stocks or bonds, or obtains bank loans and other financial investments.

User Gokhan Dilek
by
7.8k points