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Macroeconomics 111 - Chapter 4

Macroeconomics 111 - Chapter 4 - 1-30 CHAPTER 4 The Market...

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1-30 – CHAPTER 4 – The Market System and the Private Sector -The Private Sector is made up of households, businesses and the international sector -The Public Sector refers to activity by the various levels of government Productive Activity occurs in both sectors. A basic problem is determining which sector can best produce a given good or service. -In the Market System of the private sector, the consumer is supreme - Consumer Sovereignty – consumers determine what is produces through their purchases of goods and services -In contrast, in Centrally Planned Economies a government-planning group decides what will and will not be produced. -In a centrally planned economy there is a limited private sector and the market does not fully function Household: A group of people living in the same unit of housing (one or more people). The householder is the person in whose name the housing is owned or rented. -Household spending is called consumption Firms : A business organization controlled by a single management.
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