economic system
way in which a nation uses its resources to satisfy its people's needs and wants
traditional economy
economic decisions are based on customs that have been handed down from generation to generation
command economy
government controls the factors of production and makes all decisions about their use.
market
process of freely exchanging goods and services between buyers and sellers
mixed economy
combining characteristics of more than one economy
the same three basic questions
All economic systems must answer
all
Almost ____ economic systems today are mixed economies.
individuals
Who owns the factors of production and makes economic decisions in a market economy?
government leaders
In a command economy, the factors of production are decided by _________________________.
know what is expected of you
One advantage of a traditional economy is that you
capitalism
private individuals own the factors of production
profit incentive
desire to make money that motivates people to produce goods and services.
profit
amount left over after all the costs of production have been paid
private property
whatever is owned by individuals rather than by government
competition
effort or rivalry among producers/sellers of a similar product to win more business.
increased significantly
SInce the 1880s, the role of government in the U.S. has
free-enterprise
Individuals are free to own and control the factors of production. (answer is not market economy)
keep prices low.
Competition forces businesses to
economic efficiency
wise use of resources to obtain greatest possible benefits
economic equity
the attempt to balance an economic policy so that everyone benefits fairly.
standard of living
the material well-being of an individual, group, or nation measured by how well their necessities and luxuries are satisfied
economic growth
expansion of the economy to produce more goods, jobs, and wealth
economic responsibility
the need for individuals in a free-enterprise system to function as productive members of society
each member of society to make choices.
The goal of economic freedom is to allow
increases
When the benefits of and economic action are greater than the costs, economic efficiency ________________.
standard of living
The goal of economic stability is to reduce extreme ups and downs in the __________________________.
communism
used by Karl Marx for an ideal society where government is not needed.
proletariat
a Karl Marx term referring to workers
democratic socialism
government controls only some areas of the economy. (not looking for mixed economy here)
authoritarian socialism
entire economy is controlled by a central government as in a command economy.
capitalism
planning and decision making done by individuals, firms, and elected government officials; like free-enterprise and market economy