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Sample Essay – Economic transactions

An economic system is a complex combination of a number of entities, agencies and firms that form the economic structure of a country which defines the social community. These agencies and entities are combined with each other through lines of trade. These lines of trade are used to execute transactions therefore goods and money are continuously flowing through these lines of trade.

There are a number of entities that constitute the economic system which include; government, finance institutions, land lords, producers and house holders. The economic transactions take place between these entities on a continuous basis and the pace of the economic activity between these entities defines the pace of the growth of the economy.

Economic transactions

The government plays an important part in the economic system as it is capable to enforce such policies that drive the economic system. It is upon the government of a country to determine the nature of the economic system of a country. In a laissez faire economic system, the growth of economy is determined by the natural economic forces of demand and supply without any intervention by the government.

Such economies have failed in the past therefore applying laissez faire economic system is not considered a good idea. Another nature of economic system is controlled economic system which is completely controlled by the government and the regulatory authorities determine the quantity and price of goods to be made available in the market.

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