CHAPTER 2
The Market System and the Circular Flow
Because learning changes everything.® Shutterstock/vchal.
©2021 McGraw Hill Education. All rights reserved. No reproduction or further distribution without the prior written consent of McGraw Hill Education.
, Chapter Contents
Economic Systems
The Characteristics of the Market System
Five Fundamental Questions
The “Invisible Hand”
The Circular Flow Model
How the Market System Deals with Risk
2-2
©2021 McGraw Hill Education. All rights reserved. No reproduction or further distribution without the prior written consent of McGraw Hill Education.
, Economic Systems
Economic systems
• Set of institutionalized arrangements
• Coordinating mechanism
Differences in systems exist by
• Degree of decentralized use of markets and prices in
decision-making
• Degree of centralized government control
LO2.1 2-3
©2021 McGraw Hill Education. All rights reserved. No reproduction or further distribution without the prior written consent of McGraw Hill Education.
The Market System and the Circular Flow
Because learning changes everything.® Shutterstock/vchal.
©2021 McGraw Hill Education. All rights reserved. No reproduction or further distribution without the prior written consent of McGraw Hill Education.
, Chapter Contents
Economic Systems
The Characteristics of the Market System
Five Fundamental Questions
The “Invisible Hand”
The Circular Flow Model
How the Market System Deals with Risk
2-2
©2021 McGraw Hill Education. All rights reserved. No reproduction or further distribution without the prior written consent of McGraw Hill Education.
, Economic Systems
Economic systems
• Set of institutionalized arrangements
• Coordinating mechanism
Differences in systems exist by
• Degree of decentralized use of markets and prices in
decision-making
• Degree of centralized government control
LO2.1 2-3
©2021 McGraw Hill Education. All rights reserved. No reproduction or further distribution without the prior written consent of McGraw Hill Education.
