3 key economic key questions:
- What goods and services should be produced?
- How should these goods and services be produced?
- Who consumes these goods and services?
_____ _____: the method used by a society to produce and distribute goods and services
Economic system
_____ _____ are the income people receive for supplying factors of production
Factor payments
Economic efficiency is all about making the most of _____
Resources
Freedom from government intervention in the production and distribution of goods and services is _____ _____
Economic freedom
Economic equity refers to fair distribution of _____
Wealth
Economic growth and innovation leads to a higher _____ __ _____
Standard of living
All nations have some sort of _____ _____
Economic goals
A _____ _____ is an economic system that relies on habit, custom, or ritual to decide questions of production and consumption.
Traditional economy
In a _____ _____ economic decisions are made by individuals and are based on exchange, or trade.
Market economy
_____ _____ are ran by solely the government
Command economies
_____ _____ are market-based systems
Mixed economies
A _____ is a forum for buyers and sellers to exchange products
Market
We are not _____-_____
self-sufficient
People have _____
specializations
A _____ _____ is one that is based on voluntary exchanges
Free market
_____ own the factors of production and are the consumers of goods and services
Households
A _____ is and organization that uses resources to produce a product.
Firm
When firms purchase the factors of production from households it is called the _____ _____
Factor market
The _____ _____ is where the households purchase the goods and services from the firms
Product market
Adam Smith first noted that people operate in the market considering only their _____ _____
Self interest
We look for _____ in the market.
•Monetary vs. nonmonetary
Incentives
Incentives are at the heart of _____ in the market
Competition
Adam Smith referred to the self-regulating nature of the market as…
The invisible hand
_____ _____ is the idea that consumers decide what gets produced
Consumer sovereignty
_____ _____ economies oppose private property, free market pricing, competition, and consumer choice
Centrally planned
In this economy, the government owns the _____ and _____
Land, capital
Consumer choice and competition is completely _____ from the system.
Absent
_____ is a belief that democratic means should be used to distribute wealth equally throughout society
Socialism
_____ a centrally planned economy with all economic and political power resting in the hands of the central government
Communism
Socialist countries can still allow room for democracy, while communist countries are _____.
authoritarian
Communist governments typically do not _____ individual freedom and impose strict regulations on their citizens
Allow
Soviet Union
1917-1991
Soviet planners were most _____ with building national power and prestige in the international community
Concerned
_____ were large farms leased from the state to groups of peasant farmers
Collectives
The Soviet government had _____ that the farmers had to meet
Quotas
Soviet factories were also _____-_____
State-owned
_____ _____ requires a large capital investment and that produces items for other industries
Heavy industry
Jobs and wages were set by the _____
Government
_____ was illegal in the Soviet Union.
Entrepreneurship
_____ _____ states that government generally should not intervene in the marketplace
Laissez faire
_____ _____ is property that is owned by individuals or companies, not by the government or people as a whole.
Private property
_____ _____ is an economic system characterized by private or corporate ownership of capital goods
Free enterprise
In order to make this transition, state firms must be _____
Privatized
