Subsystems of the Economic System Analysis
Subsystems of the Economic System and Mark Allocation Rules
When identifying and describing the various subsystems within an economic system, it is essential to follow specific guidelines regarding examination responses and mark allocation. The module documentation (identified as module ) provides a specific instructional note (NB) regarding how to structure answers for these topics. According to this rule, the number of examples provided must correspond exactly with the total mark allocation for the question. For instance, if a question is assigned a value of marks, the student is expected to mention the name of the subsystem and provide distinct examples related to that subsystem. This guidance is noted on page of the material at the timestamp of .
The Product Market Subsystem
The product market is a central subsystem of the economic system that encompasses the creation and transfer of goods. This subsystem includes the production process, which refers to the methods and stages involved in manufacturing products. Key resources used within this market include machines and labour. Beyond manufacturing, the product market also involves the distribution of goods to end-users and the administrative and strategic aspects of sales, such as competition between firms and the use of advertisements to influence consumer behavior.
The Money Market Subsystem
The money market subsystem focus on the financial resources and transactional capabilities within the economy. Primary examples of factors in this subsystem include the availability of money, which determines the liquidity available for commerce and investment. It also includes the prevailing interest rates, which influence the cost of borrowing and the incentive for saving. Furthermore, the subsystem covers modern transactional infrastructure, specifically internet payment systems that facilitate the digital exchange of capital.
The Labour Market Subsystem
The labour market is the subsystem concerned with the human resources driving the economy. It is characterized by several key variables, including the availability of skilled labour, which refers to the supply of workers with the necessary training for specific roles. Other critical components include the willingness to be productive among members of the workforce and the general knowledge of business that workers possess. This subsystem is also influenced by external global factors, specifically competition from other countries, which can affect domestic employment and wages.
Capital Productivity Subsystem
Capital productivity refers to the effectiveness and availability of the physical assets used in economic production. Detailed examples of this subsystem include the availability of machines required to perform specific industrial or commercial tasks and the specific cost of machines, which dictates the level of investment required for production. Additionally, the subsystem is dependent on the broader infrastructure of the country, such as transportation and energy networks, which support the utilization of capital assets.
Technological Changes Subsystem
The technological changes subsystem tracks the impact of innovation on economic processes. Key elements within this subsystem include the availability of technology to do the job, which ensures that necessary tools are accessible for work. It also considers the effectiveness of the technology in improving efficiency or quality of output. Finally, this subsystem is defined by the rate of innovation, specifically how quickly new technology is introduced into the production and business environment.