Which one? If not, what economic system do you think your nation runs? 2. In the space below, organize your economic data. Highlight statistics that you think would indicate that your country runs a market-oriented economy.
There are governments that totally control their economy and do not do business with other countries. There are governments that rule monetary policy and tax business, but do not become concerned in the markets otherwise. Similar to mixed economies, the positions of a government in the configuration of an economy is crucial to understand in order to understand the economics of the country. Concepts of Macroeconomics and Understanding Business or economic cycles focus on the variations, both anticipated and unexpected, within an economy. Variations in business cycles are able to be seen as short-term and long-term progression developments and they could shift.
Explain the viewpoints of classical and Keynesian economists. How did the economy that existed at the time of these theories influence them? Which theory is more appropriate for the economy today? Why? Explain the viewpoints of classical and Keynesian economists.
Capitalism relies on competition for resources and a system of checks and balances. Individuals can compete against others to provide the best goods and services, at a price people are willing to pay. Those who do are likely to succeed, those who do not will eventually fail and leave the marketplace (Diffen). Capitalists believe that society is better off with the free market determining economic winners and losers rather than the government. Capitalist systems general goal is low taxes.
Murphy describes Capitalism “as a system in which people are free to use their private property without outside interference” (Murphy, p. 1). It is also known to be referred to as a “free market” simply because it gives people the option to make their own decisions. This idea can be summed up in the phrase “laissez-faire”. The idea is that society contains within itself the capacity for ordering and managing its own path of development. “It follows that people should enjoy the liberty to manage their own lives, associate as they please, exchange with anyone and everyone, own and accumulate property and otherwise be creative by state expansion into their lives” (Tucker, n.p.).
Study the demand elasticity for its products and discuss the availability of close substitutes for its products. How does that affect pricing decisions? Analyze the company’s profitability. Identify the economy or industry influences on its costs, operations, and profitability. Describe the competitive environment in which the firm operates, the distribution of market power, and the strategic behavior of the firm and its competitors.
Prices influence what consumers want and how they are regulated. Team B also learned about a market where economic forces function unrestrained, also known as the perfectly competitive market according to Colander (2010).
Economies were created through trading and bartering, mostly through social circles and relationships. Taxes and custom duties were created so that trade could be controlled to protect their economy. Two dominant economic systems exist throughout the world. They are capitalism and socialism. “Capitalism is an economic and social system in which capital and the non-labor factors of production or the means of production are privately controlled; labor, goods and capital are traded in markets; profits are taken by owners or invested in technologies and industries; and wages are paid to labor” (wikibooks.org).
Federal Reserve Paper Money is define as the assets that people are generally willing to accept in the exchange of goods and services or for payment of debts (Hubbard & O'Brien, pg 826). The nation’s central bank also known as the Federal Reserve Bank controls the money. The main purpose of money is to buy goods and services that are available in the market. The Federal Reserve Bank evaluates the economic solidity to make certain changes to the monetary policy to maintain a good economic health. During the barter system goods and services were traded directly for other goods and services.
Governments may choose to increase minimum wage on an arbitrary basis, making it difficult for companies to hire individuals at a consistent market rate. Government price controls distort the economic theory of supply and demand. Supply and demand is a significant underlying feature of free-market economies. This theory allows individuals and businesses to make decisions based on self-interest. Businesses often pay individuals a wage based on current market standards.