Since the time of Adam Smith, market economies have evolved enormously. Advanced capitalist economies, such as the United States, Western Europe, and Japan, have three distinguishing features: trade and specialization, money, and capital.

• An advanced economy is characterized by an elaborate network of trade, among individuals and countries, that depends on great specialization and an intricate division of labor.

• Modern economies today make extensive use of pioneer, or the means of payment. The flow of money is the lifeblood of our system. Money provides the yardstick for measuring the economic value of things and for financing trade.

• Modem industrial technologies rest on the use of vast amounts of capital: precision machinery” large-scale factories, and stocks of inventories. Capital goods leverage human labor power into a much more efficient factor of production and
allow productivity many times ‘greater than that capable in an earlier ‘age.

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