Chapter 2 Terms Flashcards
1
Q
Laws of Economics
A
- General rules or principles guiding the production, distribution, and consumption of goods
2
Q
Mercantilism
A
- The economic system whose goal was to build up the state’s treasury
3
Q
Trade Balance
A
- The difference in value of the goods that a country sells abroad compared to those it purchases from other countries
4
Q
Tariffs
A
- Taxes that governments apply only to imported goods
5
Q
Imperialism
A
- The establishment of colonies and extensive territories created to benefit their mother countries
6
Q
Physiocrats
A
- What French economists called themselves
- Favored an “natural” economy as opposed to an “unnatural” economy
7
Q
“laissez-faire”
A
- Let things alone
8
Q
Classical Economics
A
- The theories developed by economists of the 19th and early 20th centuries that stated that the free market was the best possible economic system
9
Q
Adam Smith
A
- The founder of modern economics
- Wrote: The Wealth of Nations in 1776
10
Q
The Wealth of Nations
A
- Written by Adam Smith
- 1776
- Inspired the early leaders of America
11
Q
Division of Labor
A
- The separation of work into individualized tasks
12
Q
Specialization
A
- The production of goods by people doing the jobs they do best
13
Q
The Two Components of Adam Smith’s Ingredients of Success
A
- Division of Labor
- Free Market
- He said that it is as if they have been brought together by an “invisible hand”
14
Q
Prosperity
A
- Economic Success
- The condition of enjoying many goods, including services
15
Q
Wealth
A
- The value of all the things that people own
16
Q
Ways Countries Have Tried to Increase Their Wealth
A
- Produce more goods from existing resources
- Increase the amount of resources available for the production of goods
- Find new resources to satisfy existing wants
- Make goods already being produced more effective in satisfying wants
- Reduce people’s wants
- Redistribute the goods that are already being produced among the population
17
Q
Labor
A
- Human activity which results in the creation of goods and services
18
Q
Work
A
- Emphasized in the rest of the book
19
Q
What is the true source of prosperity?
A
- Diligent work directed by ingenious intelligence allowed to develop under conditions of freedom
