Chapter 6 Terms

Question 1

An economic philosophy commonly held in Europe from the sixteenth to the eighteenth centuries that advocated the accumulation of gold and silver as national wealth

Answer 1

Mecantilism

Question 2

The condition experienced when a nation sells more goods abroad than it purchases from foreign nations

Answer 2

Favorable Balance of Trade

Question 3

The idea that the government should generally leave the economy of a nation alone and allow the people to seek their own profit

Answer 3

Laissez-Faire

Question 4

An economic system in which private individuals own most of the factors of production and make most economic decisions

Answer 4

Capitalism

Question 5

An economic system in which a central authority, committee, or the people in common generally own the factors of production and make economic decisions

Answer 5

Socialism

Question 6

The most extreme form of capitalism in which private citizens own all factors of production and make all economic decisions

Answer 6

Radical Capitalism

Question 7

The form of capitalism allowing the government only minimal ownership of resources and decision-making power

Answer 7

Classic Liberal Capitalism

Question 8

Needed goods that private firms cannot create at a profit

Answer 8

Public Goods

Question 9

A form of capitalism in which the vast majority of the factors of production are owned by private citizens but the government intervenes widely in economic decisions to ensure that egalitarian goals are carried out

Answer 9

State Capitalism

Question 10

A nation under extreme state capitalism in which high taxes are used to provide wide social programs

Answer 10

Welfare State

Question 11

A transitional economic system bridg­ing the gap between capitalism and socialism with the pre­dominant characteristic of the state’s taking possession of those industries that are the cornerstones of the economy

Answer 11

Social Democracy

Question 12

The government’s acquisition of the ownership of major industries

Answer 12

Nationalization

Question 13

The government’s selling of nationalized businesses back to private owners

Answer 13

Privatization

Question 14

In his __________ __________, Marx argued that any arrangement of the tools of production short of total state ownership would be counterproductive.

Answer 14

Communist Manifesto

Question 15

The economic sense, the most extreme form of socialism, in which all individuals voluntarily contribute their labor for the good of the society while taking from the economy only the goods and services that they truly need

Answer 15

Communism

Question 16

A form of socialism in which the government is both the central owner and the decision maker in all economic affairs of the state

Answer 16

Centralized Socialism