Chapter 2 Flashcards
Economic goals
Five conditions of the next economy that are desired by society and pursued by governments through economic policies.
(Full employment,stability,economic growth,efficiency, and equity)
Societal values
Citizens well-being such as their ability to participate in making decisions that affect them
Traditional economy
Relies on habit customer ritual to decide what to produce how it’ll be done and who distributes it
Market economy
Decisions are made by individuals and are based on exchange of trade
Command economy
Only government decides how to solve all three economic questions
Mixed economy
Market-based economic system where government plays a limited role
Factor market change
Market in which firms purchase the factors of production from households
Free-market economy
Individuals in privately owned businesses on the factors of production make and buy what they want
Competition
The struggle among producers for the dollar of consumers
Problems of centrally planned economy’s
Poor quality
Serious shortages of nonpriority goods and services
Diminishing production
Rise of mixed economies
Limits of Laissez Faire
Balancing control and freedom
Continuum
Range with no clear divisions
Free enterprise
Our free enterprise has many key characteristics. (profit motive, open opportunity, legal equality, private property rights, free contract,voluntary exchange, competitions)
