Chapter 2 Flashcards
Economic Systems
Goods and Services
Goods: houses, food, clothing
Services: Airline Pilots, teachers, doctors
Trade
buying, selling, and exchanging of goods and services
Domestic Trade
trade within a nation
International trade
trade between nations
GDP
Gross Domestic Product, a key indicator of a country’s economic wealth
Benefits of Trade
- improved standard living
- increased productive capacity
- increased earnings for a nation
Standard living
is the level of material well being that a nation enjoys
Specialization
which is the producing and exporting of those goods that a nation is best suited to produce
A nations system of public works, with their buildings, equipment and workers, is known as its
Infrastructure
Export
send out and sell to other nations the goods a nation produces
Import
bring in and buy from other nations goods
the expenditure of something in order to achieve a goal
cost
Economic Systems must answer 3 questions
- what to make (produce)?
- HOW and by WHOM should its products be made?
- Who gets what’s made?
Major Economic Systems
a. Traditional Economy
b. market economy
c. command economy
d. mixed economy (that is they have features of all 3 economies)
Most people in this economy are farmers
Traditional Economy
An economic system that is controlled not by the government but by privately owned business
Market Economy
America’s economy (bonus)
capitalism
Fundamental economic questions are answered by individual businesses and consumers
free enterprise
Characteristics of a market economy
- profit motivated
- competition
- supply and demand
- shares of stock
An economy that is controlled by the government
Command Economy
2 types of command economy
a. socialism
b. communism
