The Operation of an Economy

North American Version. There are many different economic systems throughout the world, but they all have to address the same basic questions. We investigate these questions, and use the production of bread to show how resources are combined to create goods and services, and the benefits that arise from this process. We also investigate the different sectors in an economy - households, firms, finance, government and foreign - and show how they interact using the circular flow of income. Practical examples illustrate the problems faced when an economy is in a state of extreme disequilibrium.