Unit 2 Flashcards
(25 cards)
Economic System
The way a nation uses its limited resources to fulfill unlimited wants and needs.
Basic economic questions
What goods/services should be produced?
What quantities of goods/services to produce?
How should goods/services be produced?
For whom should the goods/services be produced?
Factors of production(Economic Resources)
Natural resources
- Things produced by nature
Human resources
- people that do work (labor)
Capital resources
- money, machines, equipment…
Entrepreneurship
- the person willing to take the risk of opening and operating a business
Scarcity
a limited amount of something
The Economic Problem
Limited resources to meet unlimited needs and wants
Elements of an economy
Consumers/ Households
Business
Government
The Circular Flow of Money
How money moves through an Economy, from Consumers to Business to Government
World Economic System
Traditional Economy
Planned/ Command Economy
Market Economy
Mixed Economy
Market Economy
All economic decisions are made in the marketplace by customers
and consumers
Planned/ Command Economy
The government controls all resources and answers economic questions.
Traditional Economy
Things are done the way they’ve always been done
Mixed Economy
a combination of all economic systems where consumers make economic decisions with limited government involvement
Characteristics of Private Enterprise
Freedom Of Ownership
Freedom of Profit
Freedom of Competition
Freedom Of Ownership
Individuals have to and operate their own business
Freedom of Profit
Individuals can earn and determine the use of the money they make
Freedom of Competition
individuals have the right to open and operate businesses offering products similar to other businesses
Causes of Economic Decisions
Price
Quality
Customer Service
Warranties
Need or Wants
Person’s economic position
The economy
Nature
Competition
Domestic Production
products are produced within borders of country
World trade
trading across borders to obtain products/services countries don’t produce with resources they possess
Trade deficit
Trade deficit- imports> exports
Import
products/services brought in from other countries
Exports
products/ services sold to other countries
Balance of trade
dollar amount of what a country import is equal to the amount of exports
Trade Surplus
imports<export
