1.4 How to Organize Economies: An overview of Economic Systems Flashcards
What are 3 ways society organizes an economy?
- Traditional Economy
- Command Economy
- Market Economy
In a _______ economy; what you produce is what you become. Little economic progress or development.
Traditional Economy
In a ______ economy, economic effort is devoted to goals passed down from a ruler or ruling class. (Government)
Have a very centralized structure.
Command Economy
What does the government decide in a command economy?
- What goods and services will be produced and what to charge for them
- Methods of production
- Wages for workers
A _____ is an insitution that brings together buyers and sellers of goods or services who may be either individuals or businesses.
Market
What is a market economy?
Decision making is decentralized, and based on private enterprise.
- Supply of goods and services depends on demand
- Market forces determine economic decisions not the government
What is a private enterprise>
the private individuals own and operate the means of productions (resources and businesses)
In a market economy what is necessary to convert resources into something that society values?
an individuals income (especially labor)
Why are regulations necessary in any market?
To govern matters like safeguarding private property against theft, protecting people from violence, enforcing legal contracts, preventing fraud, and collecting taxes.
_____ is the expanding cultural, political, and economic connections between people around the world.
Globalization
International trade and financial capital flows measure what?
Globalization
What are some reasons globalization has occured?
- Improvements in shipping, driving down transportation costs
- Transportation of information using technology
- International agreements and treaties between countries have encouraged greater trade
