Ch.2 Vocab

Question 1

Economics 12

Answer 1

Chapter 2 Vocabulary

Question 3

balance of payments accounts

Answer 3

National account of international payments and receipts, divided into current account, and capital and financial account.

Question 5

barter

Answer 5

The trading of goods and services without the use of a monetary system; such transactions are common in traditional economies.

Question 7

capital

Answer 7

A factor of production that refers to machinery, factories, warehouses, and equipment used to produce goods and services.

Question 9

capitalism

Answer 9

An economy characterized by private ownership of business and industry, the profit motive, and free markets.

Question 11

command economy

Answer 11

An economic system in which production decisions are made by central planners.

Question 13

communism

Answer 13

A political system on the extreme left, based upon the theories of Karl Marx, that calls for government or community ownership of the means of production.

Question 15

consumer sovereignty

Answer 15

A principle of market economies that the production choices of the economy are ultimately made by the buying decisions of consumers.

Question 17

crown land

Answer 17

A Canadian term for government-owned land.

Question 19

deflation

Answer 19

A general fall in the price levels of an economy.

Question 21

democracy

Answer 21

A political system characterized by a freely elected government that represents the majority of its citizens.

Question 23

dictatorship

Answer 23

A political system in which a single person exercises absolute authority over an entire nation.

Question 25

economic growth

Answer 25

An increase in an economy’s total production of goods and services.

Question 27

economic system

Answer 27

The laws, institutions, and common practices that help a nation determine how to use its resources to satisfy as many of its people’s needs and wants as possible.

Question 29

entrepreneurship

Answer 29

The contribution made by an owner, manager, or innovator who organizes land, labour, and capital to produce goods and services.

Question 31

environment for enterprise

Answer 31

A society’s social values and institutions, such as stable government, that are favourable to businesses attempting to produce and sell goods and services.

Question 33

factors of production

Answer 33

Resources (such as land, labour, and capital) that are used to produce goods and services.

Question 35

fascism

Answer 35

A political system on the extreme right, combining a free-market economy with a non-democratic form of government.

Question 37

hidden economy

Answer 37

The growing practice in Canada and other mixed economies of citizens trading one service for another to avoid taxation or to ensure a more personal level of services; illegal transactions occurring in the economy that are not recorded in GDP calculations (such as payment of employees “off the books”); and non-market production.

Question 39

inflation

Answer 39

A general rise in the price levels of an economy.

Question 41

intangible resources

Answer 41

Resources that are necessary for production, such as entrepreneurship, knowledge, and an environment for enterprise, but are not physical entities.

Question 43

labour

Answer 43

A factor of production comprising the physical and mental effort contributed by people to producing goods and services.

Question 45

land

Answer 45

A factor of production that includes all natural resources used to produce goods.

Question 47

market economy

Answer 47

An economic system in which production decisions are made by the actions of buyers and sellers in the marketplace.

Question 49

mixed economy

Answer 49

An economic system, such as Canada's, that contains elements of market, command, and traditional systems.

Question 51

money capital

Answer 51

The funds used to acquire real capital.

Question 53

nationalization

Answer 53

The takeover of a privately owned business by the state.

Question 55

private enterprise

Answer 55

A term applied to the private ownership of productive resources, a characteristic of market economies.

Question 57

productive resources

Answer 57

Anything that can be used to manufacture goods or services.

Question 59

productivity

Answer 59

A firm's ability to maximize output from the resources available, usually measured as the firm's output per worker.

Question 61

public debt

Answer 61

The total debt held by federal and provincial governments accumulated from their past borrowing, on which interest must be paid.

Question 63

raw materials

Answer 63

All natural resources used in production.

Question 65

real capital

Answer 65

A more precise term than capital for the machinery, factories, warehouses, and equipment used to produce goods and services, as distinct from financial capital.

Question 67

socialism

Answer 67

A political system of the moderate left that calls for public ownership of the principal means of production, to be achieved in a democratic and peaceful manner.

Question 69

tangible resources

Answer 69

Physical resources (such as land and labour) that are necessary for production and are visible.

Question 71

traditional economy

Answer 71

An economic system in which production decisions are determined by the practices of the past.

Question 73

transfer payments

Answer 73

Direct payments from governments to other governments or to individuals; a mechanism for providing social security, income support, and alleviation of regional disparities.

Question 75

value added

Answer 75

The increase in market value of a product resulting from additional processing or refinement of that product.