This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Economics CHAPTER 2 NOTES The Market System and the Circular Flow Economic System- A particular set of institutional arrangements and a coordinating mechanism- to respond to the economizing problem. Must determine what goods are produced, how they are produced, who gets them, how to accommodate change, and how to promote technological progress. Two economics extremes: The command system and the market system. Command System- Also known as som or communism. Government owns most property resources and economic decision making occurs through a central economic plan. Market System- or Capitalism-characterized by the private ownership of resources and the use of markets and prices to coordinate and direct economic activity. Laissez Faire- (Capitolism) projecting private property and establishing an environment appropriate to the operation of the market system. Keep govt from interfering with the economy by minimizing interference. Private Property- Private individuals and firms, not the govt , owns most of the property resources ( land and capital). Coupled with the freedom to negotiate binding legal contracts, enables individuals and business to obtain, use and dispose of property resources as they see fit....
View Full Document
- Fall '09