Answer to Question 2:
What do economists mean when they refer to the economy?
When they talk about the economy, economists are referring to the
capital stock, the set of institutions within which economic
activity is conducted and the rules governing the behaviour of those
institutions. By institutions they mean business firms, partnerships,
government agencies, charitable organizations, single person enterprises,
churches, and so forth. The rules are represented by the legal
system governing individual and institutional behaviour.
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