In a capitalist system, prices are controlled by A. the law of supply and demand. B. the Federal Reserve Board. C. the consumer Price Index. D. monetary policy.
Business · High School · Mon Jan 18 2021
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A) the law of supply and demand.
In a capitalist system, the prices of goods and services are determined by the forces of supply and demand in the market. The law of supply and demand states that when the supply of a product goes up, the price tends to go down, assuming demand remains constant. Conversely, when the demand for a product increases and the supply remains unchanged, the price tends to increase. This interaction between supply and demand naturally guides the price of goods and services without the need for central price controls.