Refer to the table above. The private sector balance is a A) ...

[CQXA]

Refer to the table above. The private sector balance is a
 
  A) 700 billion surplus.
  B) 400 billion deficit.
  C) 700 billion deficit.
  D) 2,900 billion deficit.
  E) 2,900 billion surplus.

Question 2

List and explain the three fundamental economic questions that must be answered by all economic systems.
 
  What will be an ideal response?

[T4T]

Answer to Question 1

C

Answer to Question 2

First, all economic systems must answer the question of what goods and services get produced and in what quantities? In other words, among the near infinite types of goods and services, society must decide what will be produced and how much of each good and service will be produced. Next, every economic system must decide, how are goods and services produced? This question needs to be answered because there are always many ways to produce a particular good or service (for instance, using a lot of workers and only a little machinery, or a lot of machinery and fewer workers), so the method that will be used must be decided. Finally, once the goods and services are produced the society must decide for whom are the various goods and services produced? In other words, societies must decide whether the goods and services are distributed so that everyone gets about the same amount or whether they are distributed so that some people get more than others.