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The sum total of arrangements for the production and distribution of goods and services in a society is best described as the:
AFactor market
BPrice mechanism
CCentral planning authority
DEconomic system
Answer & Solution
Correct answer: D. Economic system
1. An economic system is defined as the total arrangements giving effect to economic choice.
2. It covers both production and distribution and includes individuals and institutions.
3. This matches the definition of an economic system.
4. Price mechanism is one tool within a system, not the system itself, ruling out that option.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 1 Unit II "Basic Problems of an Economy and Role of Price Mechanism", p.1_
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