Ch.2 "Economic Spectrum" Flashcards
(20 cards)
Economic System
organized way of providing for the wants and needs of their people
Traditional economy
allocation of scarce resources, and nearly all other economic activity, stems from ritual, habit, or custom
Command Economy
a central authority makes most of the WHAT, HOW, FOR WHOM decisions
Market Economy
people and firms act in their own best interests to answer the WHAT, HOW, FOR WHOM questions
Market
meeting place or mechanism that allows buyers and sellers of an economic product to come together
Mixed economy
people carry on their economic affairs freely, but are subject to some government intervention
Socialism
economic system in which government owns some factors of production and has a role in determining what and how goods are produced
Communism
economic and political system in which factors of production are collectively owned and directed by the state or government, theoretically it is supposed to be a classless society in which everyone works for the greater good
Minimum Wage
lowest legal that can be paid to most workers
Social Security
federal program of disability and retirement benefits that covers most working people
Inflation
rise in general level of prices
Fixed income
income that does not go up even though prices go up
Free Enterprise
economy in which competition is allowed to flourish with a minimum of government interference; this term describes America’s economy
Voluntary Exchange
act of buyers and sellers freely and willingly engaging in market transactions; characteristic of free enterprise and capitalism
Private Property Rights
fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish, includes both tangible and intangible property
Profit
extent to which persons or organizations are better off at the end of a period than they were in the beginning; usually measured in dollar amount
Profit Motive
driving force that encourages people and organizations to improve their material well being; characteristic of capitalism and free enterprise
Competition
the struggle among sellers to attract consumers while lowering costs
Consumer Sovereignty
role of a consumer as ruler of the market when determining the types of goods and services produced
Modified Free Enterprise Economy
free enterprise system with some government involvement, same as modified private enterprise economy
