Chapter 2 Vocab Flashcards
(22 cards)
an economy in which production is based on customs and tradition
traditional economy
an economy in which a central government authority makes all basic economic decisions and controls the factors of production
command economy
an economy in which the government has little say in what, how, and for whom goods are produced and in which the factors of production are owned by individuals
market economy
the free exchange of goods and services
market
the impulse that encourages people to fulfill their needs and wants
self-interest
something that encourages an action or effort, expectation of rewards and fear of losses
incentive
an economy that combines elements of the traditional, market and command economic models
mixed economy
an economic system in which the government owns or controls nearly all factors of production; also called communism
authoritarian socialism
economic system in which the government owns or controls nearly all factors of production; also called authoritarian socialism
communism
a market-based economic system in which individuals own and control the factors of production
capitalism
an economic system in which some means of producing and distributing goods are owned or controlled by am elected government
democratic socialism
system in which private business operates with minimal government involvement
free enterprise
property that is owned by individuals and businesses rather than by government
private property
a legally binding agreement either oral or written between individuals such as to buy and sell goods and services
contracts
in business a state of rivalry among sellers of the same or similar products in which each seller tries to gain a larger share of the market and increase profits
competition
the unconditional and mutually beneficial transfer of products between producer and consumer
voluntary exchange
the market in which producers offer – and consumers purchase – final goods and services
product market
the market in which households exchange resources with businesses and the government
resource market
money payments that households receive from business firms and the government in exchange for resources or funds that a business takes in for supplying goods and services
income
the lowest possible of unemployment in an economy
full employment
the condition that exists when overall price levels remain relatively constant over a period of time
price stability
people’s economic well-being as determined by the quantity of goods and services they consume in a given time period
standard of living
