Self-interest is the motivator of economic activity. Competition is the regulator of economic activity. Together they form what Adam Smith called the invisible hand, which guides resources to their most valued use.

Answer and Explanation: The economy is guided by supply (firms) and demand (households). The decisions relating to production, investment, and distribution of goods and services to consumers are dependent on prices, which in turn, are influenced by supply and demand.

Production, consumption, and capital formation are the primary economic activities of an economy.

An economic activity is a process that, based on inputs, leads to the manufacture of a good or the provision of a service.

One can broadly classify five distinct examples of economic activities. These activities are producing, supplying, buying, selling, and the consumption of goods and services.

The government has two primary ways of interacting with the economy. Through monetary policy, the government controls prevailing interest rates and makes obtaining debt easier or harder. Through fiscal policy, the government controls spending levels and how to allocate resources.

In the United States, the government influences economic activity through two approaches: monetary policy and fiscal policy. Through monetary policy, the government exerts its power to regulate the money supply and level of interest rates. Through fiscal policy, it uses its power to tax and to spend.