McConnell_Brue_Chapter02

Active but limited government the final critical

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Unformatted text preview: ted, Government The final critical component of market systems in advanced industrial economies is that of an active, but limited, government. In market systems, governments protect the right to own property and maintain national defense. Both are Although market systems have highly efficient essential to assure market systems function at efficient automatic market functions in place, there are levels. In addition, the government must also also market failures that prompt the need for compensate for a certain amount of market failure. a compensating (and sometimes regulating) Although market systems are highly efficient, they are body. not perfect and thus prompt a certain amount of inherent failure. Market failure is another area we will Chapter 2 16 revisit at a later date. Learning Objective 2-2 Slide 17 Key Market System Characteristic #1. Private Property —Most property (land and capital) is owned by individuals and firms when a market system exists in a society. • The process o...
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