EconT&T_Ch2

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