Unit 2

Question 1

Command economy

Answer 1

System in which the government controls the factors of production and makes all decisions about their use

Question 2

Market Economy

Answer 2

System in which individuals own the factors of production and make economic decisions through free interaction while looking out for their own and their families’ best interest

Question 3

Economy

Answer 3

The production and distribution of goods and services in a society

Question 4

Mixed economy

Answer 4

System combining characteristics of more than one type of economy

Question 5

Profit motive

Answer 5

The intent to achieve momentary gain in a transition or material endeavor

Question 6

Public goods and services

Answer 6

Good or serviced that government supplies to its citizens; can be used by many individuals at the same time without reducing the benefits each person receives

Question 7

Government regulation

Answer 7

A law that controls the way that a business can operate

Question 8

Freedom

Answer 8

The power or right to act, speak, or think as one wants without hindrance or resistance.

Question 9

Security

Answer 9

The state of being free from danger or threat.

Question 10

Equity

Answer 10

The quality of being fair and impartial.

Question 11

Growth

Answer 11

The process of increasing and physical size.

Question 12

Efficiency

Answer 12

Achieving maximum productivity with minimum way stuffers for expenses

Question 13

Stability

Answer 13

Not likely to change or fail; firmly established

Question 14

Redistribution of income

Answer 14

The transfer of income and wealth from some individuals to another by means of a social mechanism such as taxation, welfare, land reform, charity, confiscation, or divorce.

Question 15

Property rights

Answer 15

Laws created by the governments in regards to how individuals can control, benefit from and transfer property.

Question 16

Market failures

Answer 16

A situation in which the allocations of goods and services is not efficient

Question 17

Productivity

Answer 17

And economic measure of outputs per unit of input. Inputs includes labor and capital, while outputs is typically measured in revenue and other GDP components such as business inventories.

Question 18

Inputs

Answer 18

Resources such as people, from materials, energy, information, or finance that are put into a system to obtain a desired output. Inputs are classified under cost in accounting.

Question 19

Outputs

Answer 19

Quality of goods or services produced in a given time period, by firm, industry, or country.

Question 20

Standard of living

Answer 20

The degree of wealth and material comfort available to a person or community

Question 21

Circular flow diagram

Answer 21

A diagram that is used to represent the transactions in an economy.

Question 22

Resource market

Answer 22

A market where a business can go and purchase resources to produce goods and services.

Question 23

Product market

Answer 23

A dynamic exchange system is defined by sellers, offering, and customers. In its simplest form, a product market is a single seller providing a single offering to a single customer.

Question 24

Medium of exchange

Answer 24

An intermediary used in trade to avoid the inconveniences of a pure barter system