ECN 104 Chapter Notes - Chapter 2: Market System, Capital Good, Planned Economy
22 Oct 2016
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Ecn204 chapter 2: the market system and the circular flow (textbook notes) Every society needs to develop an economic system to respond to the economic problem: a particular set of institutional arrangement and a coordinating mechanism. Determines what goods are produced, how they are produced, who gets them, hot to accommodate the change, and how to promote technological progress: two types of economic systems. An economic system in which most property resources are owned by the government and economic decisions are made by a central government body. Concerning resources, composition and distribution of output (ex: capital and consumer goods), and the organization of production. A pure command economy would rely exclusively on a central plan to allocate the government. In reality, they tolerate some private ownership and incorporated some markets. An economic system in which property resources are privately owned, and markets and prices are used to direct and coordinate economic activities.
