the previously outlined economic players buy and sell both 1) goods and services and 2) financial
assets, and they can pay for them with either 1) money or 2) credit. In a market-based system, this exchange
takes place through free choice – i.e., there are “free markets” in which buyers and sellers of goods, services and
financial assets make their transactions in pursuit of their own interests. The production and purchases of
financial assets (i.e., lending and investing) is called “capital formation”.