Chapter 1.4 Test.

Question 1

What are the three basic questions an economy must answer?

Answer 1

What do produce, how do produce and who will receive the goods and services produced.

Question 2

How do small businesses contribute to the economy?

Answer 2

Small businesses contribute to the economy by contributing to revenue raised through taxation because they are taxed on the amount of profit they make and not only do small businesses pay tax, their employees also pay income tax.

Question 3

What is a common measure to check whether economic growth has occurred?

Answer 3

A common measure is to see if the Gross Domestic Product has grown.