Money makes it easier to trade, borrow, save, invest, and compare the value of goods and services. Interest rates, adjusted for inflation, rise and fall to balance the amount saved with the amount borrowed, which affects the allocation of scarce resources between present and future uses. Income for most people is determined by the market value of the productive resources they sell. What workers earn depends, primarily, on the market value of what they produce and how productive they are. Entrepreneurs are people who take the risks of organizing productive resources to make goods and services.
Profit is an important incentive that leads entrepreneurs to accept the risks of business failure.
Investment in factories, machinery, new technology, and in the health, education, and training of people can raise future standards of living. There is an economic role for government in a market economy whenever the benefits of a government policy outweigh its costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Most government policies also redistribute income. Costs of government policies sometimes exceed benefits.