Chapter 2 Flashcards
economic system in which the allocation of scarce resources, and other
economic activity, is the result of ritual, habit, or custom.
Traditional economy
organized way a society provides for the wants and needs of its people.
economic system
economic system characterized by a central authority that makes the most of
the major economic decisions.
command economy
economic system in which government owns some factors of production and has a role in
determining what and how goods are produced.
socialism
economic system in which supply, demand, and the price system help people
allocate resources and make the WHAt, HOW, and FOR WHOM to produce decisions.
market economy
economic system in which private citizens own and use the factors of production in
order to generate profits.
capitalism
economic system that has some combination of traditional, command, and
market economies.
mixed economies
worst period of economic decline in U.S. history, lasting from approximately
1929 to 1939.
great depression
economic and political system in which factors of production are collectively owned
and directed by the state; a theoretically classless society in which everyone works for the common
good.
comunism
gross domestic product on a per person basis; can be expressed in current or
constant dollars.
GDP per capita
conversion of state-owned factories and other property to private ownership.
privatization
certificates that could be used to purchase government-owned property during
privatization.
vouchers
forced common ownership of factors of production; used in the former Soviet
Union in agriculture and manufacturing.
collectivization
China’s second Five-Year Plan, begun in 1958, which forced collectivization of
agriculture and rapid industrialization
great leap forward
independent Polish labor union founded in 1980 by Lech Walesa.
solidarity
shift of an economy, or party of an economy, from private ownership to
government ownership.
nationalization
market in which goods and services are sold illegally.
black market
number of people per square mile of land area
population density
Characteristics of Traditional economy
- agriculture
- family/tribe oriented
Characteristics of command economy
- government control
- limited choices for consumers
characteristics of market economy
- freedom of choice
- competition
advantages of traditional economy
less economic destruction, everyone knows what to do
advantages of command economy
price stability, full employment potential
advantages of market economy
more profitable and more decisions
why do mix economies exist
none of them are perfectly one, benefit of different ones
people who benefit from mixed economies
the lower class people
The economies of Chile and South Korea
South Korea economy is greater, better technology, while Chile gets the medal, makes the products and sells them back to South Korea
