Chapter 2 - The coordination problem - Key terms Flashcards
1
Q
Resource allocation
A
the way in which a society’s productive assets are used .
2
Q
Market economy
A
market forces are allowed to guide the allocation of resources in a society.
3
Q
(centrally) Planned economy
A
decisions about resource allocation are guided by the state.
4
Q
Mixed economy
A
resources are allocated partly through price mechanism and partly on the basis of direction by the government.
5
Q
Capitalism
A
a system of production in which there is private ownership of productive resources, and individuals are free to pursue their objectives with minimal interference from the government.
6
Q
Invisible hand
A
term used by Adam Smith to describe the way in which resources are allocated in a market economy (where the goods produced are the goods demanded by consumers)
