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AGGREGATE MARKET ANALYSIS: An investigation of macroeconomic phenomena, including unemployment, inflation, business cycles, and stabilization policies, using the aggregate market interaction between aggregate demand, short-run aggregate supply, and long-run aggregate supply. Aggregate market analysis, also termed AS-AD analysis, has been the primary method of investigating macroeconomic activity since the 1980s, replacing Keynesian economic analysis that was predominant for several decades. Like most economic analysis, aggregate market analysis employs comparative statics, the technique of comparing the equilibrium after a shock with the equilibrium before a shock. While the aggregate market model is usually presented as a simply graph at the introductory level, more sophisticated and more advanced analyses often involve a system of equations.
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MARKET-ORIENTED ECONOMY: A mixed economy that relies heavily on markets to answer the three questions of allocation, but with a modest amount of government involvement. While it is commonly termed capitalism, the term market-oriented economy is much more descriptive of the structure of the economy. The United States is the primary example of a market-oriented economy. A market-oriented economy takes to heart the fifth rule of imperfection. Such an economy relies predominately on the efficiency of competitive markets to allocate resources, but governments enter the fray with economic policies to address market failures, business cycles, and other problems that might arise. The United States, for example, answers about two-thirds to three-fourths of the economy's resource allocation questions with markets. The remaining one-fourth to one-third are answered by governments.The key institutions that form the foundation of a market-oriented economy are: - Private Property: Private individuals, rather than governments, are the primary owners of resources, goods, and other assets.
- Individual Freedom: Those who own resources, goods, and other assets have the freedom to use their property as they see fit.
- Competitive Markets: Market are used to exchange privately owned commodities and to answer the three questions of allocation.
These three institutions create an economic environment that provides the incentives to achieve efficiency. In a market-oriented economy, buyers and sellers have the freedom to direct their resources through competitive markets to the highest valued uses. A market-oriented economy, however, is definitely a mixed economy. While most allocation decisions are made voluntarily through market exchanges, governments also impose choices on the economy through regulations, taxes, and spending. Two key functions that governments provide in a market-oriented economy are: - Legal System: Governments operate the legal system to establish the "rules of the game" and maintain order throughout society. Without such order individuals are discouraged from undertaking voluntary market exchanges.
- Public Goods: Governments provide public goods, like national defense and education, that cannot be efficiently provided through voluntary market exchanges. These goods are provided directly through taxes and spending or indirectly through regulatory oversight.
Recommended Citation:MARKET-ORIENTED ECONOMY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: April 26, 2024]. Check Out These Related Terms... | | | | | | | Or For A Little Background... | | | | | | | | | And For Further Study... | | | | | | | | | | | | |
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BLACK DISMALAPOD [What's This?]
Today, you are likely to spend a great deal of time browsing about a thrift store looking to buy either an ink cartridge for your printer or a rechargeable battery for your camera. Be on the lookout for telephone calls from long-lost relatives. Your Complete Scope
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Natural gas has no odor. The smell is added artificially so that leaks can be detected.
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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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AR Average Revenue, Autoregressive
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