Chapter 2 vocab Flashcards
(33 cards)
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 ones 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
Economic system that combines tradition and the free market with limited government involvement
Mixed economy
An 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
Ones own personal gain
Self interest
An expectation that encourages people to behave in a certain way
Incentive
The struggle among producers for the dollars of consumers
Competition
Term economists use to describe the self regulating nature of the market place
Invisible hand
The power of consumers to decide what gets produced
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 power resting in the hands of the central government
Communism
