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Problem
This chapter begins with a brief comparison of command and laissez-faire systems, then transitions to a discussion of the characteristics of a market system. The five fundamental questions faced by every economy are presented along with how a market economy answers each one. A discussion of Adam Smith's "invisible hand" leads into an explanation of why command systems have failed. The circular flow model provides an overview of how resources and goods move through a market system. The chapter includes a discussion of how a market system deals with risk. The Last Word provides a look at the vast number of ways resources could be arranged and why this doesn't result in randomness.
Read Chapter 2: "The Market System and the Circular Flow".
This chapter is discussing one possible classification of economic systems.
Do you agree with this classification?
What you think is the Mixed Economy?
What are some countries that have a Mixed Economy?
Is the U.S. economy a Market or a Mixed economy?
Explain your point of view.
Length: 1-1.5 pages.
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