Chapter 1: Economic Systems Flashcards

1
Q

What are the factors of production

A

Entrepreneurship
Labour
Land
Capital

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2
Q

Economic system definition

A

How the factors of production are organized to produce goods and services.

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3
Q

What are three economic issues?

A

WHAT is being produced
HOW is production taking place(quality and by whom)
FOR WHOM are they being produced

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4
Q

What are the three basic economic systems

A

Planned economic
Mixed market
Free market

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5
Q

What is being produced in all 3 market systems

A

Planned: what government approves
Free:all required items
Mixed: consumer willing to pay and government important

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6
Q

How is production taking place in all 3 market systems

A

Planned:no freedom of choice
Free:competing businesses
Mixed:public and private sector

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7
Q

For whom is it being produced in all 3 market systems

A

Planned: government decision
Free:those who can afford it
Mixed:government and consumer needs considered.

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8
Q

Differences between free market and planned economy

A

Owned by private-owned by government
Freedom to start business-government regulation
Supply and demand-price control

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9
Q

Communist countries/planned economic countries

A

North Korea

Cuba

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10
Q

Socialist leaning countries

A

China, Venezuela.

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11
Q

Mixed economic countries

A

France, Sweden

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12
Q

Capitalist leaning countries

A

U.S, japan

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13
Q

What are the advantages of a planned economic system

A
  1. In theory no unemployment(all citizens employed by government)
  2. All citizens have access to essential services
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14
Q

What are the disadvantages of a planned economic system

A
  1. Consumers needs very low regarding provision of services.
  2. Limited choice of products (government regulated)
  3. Little reason to work hard
  4. price controlled by government
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15
Q

What are the advantages of a free market/capitalism system

A
  1. Hard work=success
  2. Entrepreneurship, competition= better price and quality.
  3. Variety of products/services
  4. Resources privately owned and used effectively(recycled and reused)
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16
Q

What are the disadvantages of a free market/capitalism system

A
  1. Unfair distribution of wealth
  2. Monopolies, limited competition and higher price lower quality
  3. Little money/motivation to provide public services
  4. Price controlled by government
  5. Competition, bankruptcy and job losses
17
Q

What are the advantages of a mixed market system

A
  1. Social services provided by government
  2. Work opportunities created by government
  3. Combination of advantages from other markets depending on government interference
18
Q

What are the disadvantages of a mixed market system

A
  1. Public sector=bureaucratic delayed responses and decisions, poor services
  2. Combined disadvantages
19
Q

What is globilisation and reasons for it.

A

International trade, better transport and communication

20
Q

What happens with globalisation/what is present

A
Competition between businesses and countries
Money flow between countries
International travel
Exchange rates
Freedom to work in another country
Governments subsidizing production
More choices for consumer
21
Q

What shows the economic state of a country

A
Infant mortality levels
Literacy rate
Poverty
Political+economic stability
Democracy
Standard of living
Infrastructure
22
Q

What are the advantages of globalisation

A

Capital moves freely
Competition increases variety
Freedom of movement for labour

23
Q

Why does international trade benefit fist world countries?

A

Manufacturing is easier because more capital and skills are available
Unemployment is low
Stronger exchange rates
Governments can afford to subsidize industries

24
Q

Why is the market system also called the free market system

A

It has the freedom of choice guided by businesses and consumers which influences the supply and demand of industrial/consumer goods as required. The government tries not to interfere, the market forces regulate the economy.

25
Q

Another name for the market system

A

Capitalism

26
Q

What is a capitalist system

A

It allows businesses and consumers to choose the goods services quantities and prices of what they desire.

27
Q

What are monopolies

A

Limited competition, higher prices lower quality.

28
Q

Which economy contributes to globilisation

A

Free market