The central coordinating mechanism in a market economy.
Explanation of Solution
A market economy is a system in which decisions related to the economy and the pricing of products and services are directed by the exchanges that take place between country’s citizens and businesses. The central coordinating mechanism in a market economy is the price mechanism. The price mechanism is the system where the
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Chapter 3 Solutions
Macroeconomics
- Based upon those notions of self-interest and public interest and the bringing of both into harmony, according to Adam Smith, how would a market economy accomplish that harmony about which he describes? What is government's place in that market economy?arrow_forwardWhen we analyze the general equilibrium model, why do we ignore the equilibrium for the non-monetary market?arrow_forward“Market forces should be allowed to allocate resources”. Is this a positive or normative statement?arrow_forward
- Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co