the method used by a society to produce and distribute goods and services
economic system
the income people receive for supplying factors of production, such as land, labor, or capital
factor payments
the love of one’s country; the passion that inspires a person to serve his or her country
patriotism
government programs that protect people experiencing unfavorable economic conditions
safety net
level of economic prosperity
standard of living
economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
traditional economy
economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets
market economy
economic system in which the central government makes all decisions on the production and consumption of goods and services
centrally planned economy
economic system in which a central authority is in command of the economy; a centrally planned economy
command economy
market-based economic system with limited government involvement
mixed economy
ann arrangement that allows buyers and sellers to exchange things
market
the concentration of the productive efforts of individuals and firms on a limited number of activities
specialization
a person or group of people living in the same residence
household
an organization that uses resources to produce a product, which it then sells
firm
market in which firms purchase the factors of production from households
factor market
the financial gain made in a transaction
profit
the market in which households purchase the goods and services that firms produce
product market
one’s own personal gain
self-interest
an expectation that encourages people to behave in a certain way
incentive
the struggle among produces for the dollars of customers
competition
term economists use to describe the self-regulating nature of the marketplace
invisible hand
the power of consumers to decide what gets produces
consumer sovereignty
a social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society
socialism
a political system characterized by a centrally planned economy with all economic and political powers resting in the hands of the central government
communism
requiring strict obedience to an authority, such as a dictator
authoritarian
large farm leased from the state to groups of peasant farmers
collective
industry that requires a large capital investment and that produces items used in other industries
heavy industry
the doctrine that states that government generally should not intervene in the marketplace
laissez faire
property owned by individuals or companies, not by the government or the people as a whole
private property
an economic system characterized by private or corporate ownership of capital goods; investments that are determined by private decision rather than by state control; and determined in a free market
free enterprise
a range with no clear divisions
continuum
period of change in which an economy moves away from a centrally planned economy toward a market-based system
transition
to sell state-run firms to individuals
privatize
What are the 3 key economic questions?
- What goods and services should be produced?
- How should these goods and services be produced?
- Who consumes these goods and services?
Give an example of a safety net in our economic system or an example of what can be covered by a safety net
food stamps, injury, national disasters, unemployment
making the most of resources
economic efficiency
freedom from government intervention in the production and distribution of goods and services
economic freedom
the comfort in knowing we can get what we need and want
economic security and predictability
fair distribution and wealt
economic equality
What can lead to a higher standard of living?
economic growth and innovation
What is an example of a traditional economy?
the Amish
What is an example of a command or centrally planned economy?
The Soviet Union
What kind of economy do we have in the United States?
a mixed economy
Why are economies and markets necessary?
because we are not self-sufficient; we cannot make the things we need or want on our own
What are the two types of incentives?
monetary and nonmonetary
Who owns all the land and capital in a centrally planned economy?
the government
What is the less extreme form of communism?
socialism
