What are five questions that an economic system must answer?
An economic system must answer five questions: 1) What quantities of various goods and services will be produced in an economy? A successful economic system must provide answers that satisfy a large part of the population. 2) How will the goods and services be produced? There are different methods by which goods and services can be produced. An economic system must determine which methods will be used. 3) For whom will the goods and services be produced? This is a difficult question to answer. On the one hand, people must be rewarded for their production so there is an incentive to increase production. On the other hand, compassion or justice requires that those who cannot produce an adequate amount be taken care of in some way. 4) Will people be fully employed so that the economy produces at its capacity? Periods of high unemployment and/or rapid inflation disrupt an economic system. Unemployment translates into lost output for the economy. Rapid inflation makes it more difficult for
