All chapter 1-3 Flashcards
List the four factors of production
Plus the factor that economists consider the 5th
- Natural Resources
- Labor
- Capital
- Entrepreneurship
- Information
A system in which decisions involving the production, distribution, and consumption of goods are based upon custom, heredity, and caste.
Traditional economy
General rules or principles guiding the production, consumption, and distribution of goods
Laws of economics
System built on the state treasury, national wealth, and based on silver and gold
Mercantilism
The difference in value of the goods that a country sells abroad compared to those it purchases from other countries.
Trade balance
Taxes that government apply only to imported goods.
Tariffs
The establishment of colonies and extensive territories created to benefit their mother countries
Imperialism
French economists called themselves like this
Favored the “natural economy”
Physiocrats
The physiocrats were some of the earliest influential advocates of…
Means “let things alone”
“Laissez-Faire”
Theories developed on the 19th and 20th century that stated that the free market was the best possible economic system
Classical economics
The founder of modern economics
Adam Smith
Book written by Adam Smith in which he accurately described the laws of economics
The Wealth of Nations
The separation of work into individualized tasks
Division of labor
The division of tasks among workers allowed the production of goods by people doing the job they did best
Specialization
In Adam Smith formula what two things does he emphasized?
Division of labor and free market
When individual producers and consumers are allowed to pursue their own interests, they are brought together, as if by an…
“Invisible hand”
Economic success, or the condition of enjoying many goods, including services.
Prosperity
The value of all the things that people own
Wealth
A system in which a centralized authority determines the production and distribution of goods and services as well as things like savings, investments, and prices
Command economy
Planned economy
or
Directed economy
A system in which people are free to make their own economic choices.
Free enterprise economy
Also known as private capitalism or the market economy
When a system combines a good measure of free enterprise in some areas with heavy state regulation in others results on
Mixed Economy
Economic system that provides barely enough to keep a society alive
Subsistence economy
System in which the majority of a nation’s capital is owned and controlled by private individuals and businesses.
Private capitalism
System in which the owner of much of the nation’s capital is powerful, centralized apparatus called the collectivist state
State Capitalism
Anyone who owns producer goods or owns a share of some business that produces goods
Capitalist
The intelligent direction and supervision of natural and human economic resources
Entrepreneurship
or
Management
A person who undertakes management of economic enterprises on a bold scale, with some danger of losing his investment of money and time
Entrepreneur
“Captain of the industry”
Eleuthére Irénée du Pont
Capitalism’s basic components
Property rights,
freedom of enterprise competition in a market environment
limited government
Illustrates how resources and products move through the market
Circular flow model
