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Wealth and Credit Building and the Economic System

Introduction

An economic system is a set of social institutions that deal with people and institutions, and also include their relationships with sources of production, such as property or ownership. Therefore, it relates to the dealing with the problems of economy such as the identification and re-allocation of resources in the poor economy.

An economic system is the structure of production, allocation of funds, distribution of products and consumption of goods and services in an economy. The idea of an economic system carries the connotation articulated parts (principles, rules, procedures, institutions) functionally harmonized to achieve certain collective goals. During the articulation of parts, each society tries to solve the fundamental problem is economic satisfaction of basic needs (David, 10).

Discussion

Credit Building in an Economic System

Credit is the provision of money or goods on credit, usually with interest payments; Valuation economic category, an essential element of commodity-money relations. The emergence of the credit is directly connected with the sphere of exchange, where the owners of commodities confront each other as the owners are ready to enter into economic relations (George, 50). The possibility of the emergence and development of credit associated with the circuit and turnover. During the movement, of fixed and circulating capital is the release of resources. The means of labor used in production for a long time, their cost is borne by the cost of finished goods parts. The gradual recovery of the cost of capital in the form of money leads to the fact that the released funds are deposited in the accounts of enterprises (Grameme, 34).

However, on the other pole there is a need to replace worn-out instruments of labor and of fairly large one-time cost. Moreover, there is vibration in the circulation and turnover show a more diversified. Thus, by virtue of the seasonality of production, deliveries and other non-uniform mismatch is the establishment and circulation of products. In some subjects, there is a temporary surplus of funds (George, 50). This creates the possibility of a credit relationship, that is, credit permits relative controversy between the time of subsidence and the need for their use in agriculture (David, 10).

Wealth Building in an Economic System

Every economy and every wealth creation system operate at its own pace to their characteristic. Each has a unique metabolic system, so to speak. We can measure the speed of a system of wealth creation in many ways: in terms of mechanical processes, business transactions, communication flows, the speed with which laboratory discoveries are converted into commercial products, the amount of time needed to take certain decisions, or deadlines that are marked to customer orders, etc. (Grameme, 34).

When comparing the overall pace of the first wave (the agricultural systems of wealth creation) with the Second Wave (industrial or systems), it is clear that the advanced economies of the chimney faster than traditional economies of agriculture (Frederic 47). Wherever it occurred, the Industrial Revolution printed a faster pace of economic processes (George, 50). However, the new ...