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Module 1: Introduction to Economics

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XSIQ
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Economics - Economic Systems

Economic Systems

In attempting to reduce the economic problem, nations develop economic
systems. An economic system is the administrative and organisational
structure that determines:

* What will be produced.

* How it will be produced.

* How the production is distributed.

Economic systems can be distinguished in terms of political ideology and
economic coordination.

Political ideology is the set of beliefs that governs the values of a
nation, including the system of property ownership. The options are:

* - a belief that resources should be predominantly owned privately by
individuals and businesses.

* - a belief that resources should be predominantly owned collectively
by the people of a nation and administered by the government on their
behalf.

Economic coordination is the mechanism that is adopted to convert scarce
resources into goods and services. The options are:

* - a government authority answers the fundamental economic questions of
what to produce, how to produce the goods and services, and who gets the
goods and services.

* - the market forces of demand and supply answer the fundamental
economic questions.

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