Question

Because the choices of consumers influence producers and the choices of producers also influence consumers, the free-market system has which of the following?

A. Only two kinds of players
B. A tendency toward equality
C. A built-in process of growth
D. A circular flow of influences

Answer 1

The free-market system has a circular flow of influences because choices made by consumers and producers impact each other. This allows the system to maintain a balance between consumer preferences and producer capabilities.

Step-by-step explanation:

The free-market system has a circular flow of influences because the choices of consumers influence producers and the choices of producers also influence consumers. This means that the actions of consumers and producers create a feedback loop, where the choices made by one group impact the decisions made by the other group. For example, if consumers demand more of a certain product, producers will increase production to meet that demand, and vice versa. This circular flow of influences helps to regulate the free-market system and maintain a balance between consumer preferences and producer capabilities.