Part 4/12:
The economy spans all markets—from wheat and automobile markets to stock exchanges—each consisting of buyers and sellers. Governments, companies, banks, and individuals all participate, engaging in trades that cumulatively shape economic trends.
Governments, for example, are divided into:
Central government: raises taxes and spends on public projects.
Central bank: controls the monetary system by regulating interest rates, printing currency, and managing credit flow.
The Role of Credit
Credit is the most dynamic and somewhat misunderstood element of the economy. It allows borrowers to obtain resources exceeding their current income, with the promise of repayment plus interest in the future.