Chapter 2: Economic Systems Flashcards
economic system that centers on families, clans, or tribes
- decisions are based on customs and beliefs
- everyone has a set role
- good of the group always comes before individual desires
traditional economy
the way in which a society uses its resources to satisfy its people’s unlimited wants
economic system
economic system where the government makes economic decisions
- determines what to produce, how to produce, and who gets products
- wants of individuals rarely considered
- government owns means of production: resources and factories
command economy
economic system driven by choices of both producers and consumers
market economy
central government makes all decisions
- decides for whom to produce, in part, by setting wages only some people have money to buy available products
centrally planned economy
government owns some of the factors of production
socialism
no private property, little political freedom
communism
requires total obedience to government
- example: communism
authoritarian system
- lived during industrial revolution
- believed the European government was oppressive (workers didn’t have enough control)
- believed workers would rebel, leading to a classless society
- wrote “The Communist Manifesto”
Karl Marx
right to own businesses and resources
- material objects, money, intellectual property, labor
private property rights
place or situation where people but and sell goods or services
market
government should not interfere in the economy
laissez-faire
system having private ownership of factors of production
- says producers will create products consumers demand
- actual market economies all have some type of government involvement
capitalism
belief that traders get more than they give up
voluntary exchange
financial gain from business transaction
profit
