Question

When defining a system, what do we mean by history and what do we mean by potential? Then give an example of a system and describe it in terms of history and potential.

Answer 1

A system is a setup of how goods and services in an economy are produced and distributed in the soceity.

E.g. socialist system where the production and distribution activities are carried out by the government

Capitalist system where the production and distribution activities are carried out by the capitalists

When talking about a system, we talk about it's history and its potential.

By history we mean the way the system was run in the past and by potential we mean the maximum capacity of the economy to produce goods and services.