chapter 2 test 1/14

Question 1

economic system

Answer 1

the way a society uses it’s scarce resources to satisfy it’s people’s unlimited wants

Question 2

traditional economy

Answer 2

an economic system in which families,clans, or tribes make economic decisions based on customs and beliefs that have been handed down from generation to generation

Question 3

command economy

Answer 3

the government decides what goods and services will be produced, how they will be produced, and how they will be distributed

Question 4

market economy

Answer 4

based on individual choice, not government directives

Question 5

centrally planned economy

Answer 5

a system in which the society’s leaders, usually members of the central government, make all economic decisions

Question 6

socialism

Answer 6

an economic system in which the government owns some or all or the factors of production

Question 7

communism

Answer 7

a more extreme form of socialism in which there is no private ownership of property and little or no political freedom

Question 8

authoritarian

Answer 8

requires absolute obedience to authority

Question 9

private property rights

Answer 9

the rights of individuals and groups to own property

Question 10

market

Answer 10

any place or situation in which people buy or sell goods or services

Question 11

laissez faire

Answer 11

a french phrase for “leave things alone”

Question 12

capitalism

Answer 12

an economic system based on private ownership of the factors of production

Question 13

voluntary exchange

Answer 13

a trade in which the parties involved anticipate that the benefits will out-weigh the cost

Question 14

profit

Answer 14

a financial gain from a business transaction

Question 15

competition

Answer 15

the effort of two or more people, acting independently, to get the business of others by offering the best deal to

Question 16

consumer sovereignity

Answer 16

the idea that because consumers are free to purchase what they want and to refuse products they don’t want

Question 17

specialization

Answer 17

a situation in which people concentrate their efforts in the areas in which they have an advantage

Question 18

circular flow model

Answer 18

it visualizes how all interaction occur in a market economy

Question 19

product market

Answer 19

market for goods and services

Question 20

factor market

Answer 20

the market for the factors of production

Question 21

what are the fundamentals of market economies?

Answer 21

1. private property rights
2. specialization
3. consumer sovereignty
4. competition
5. voluntary exchange
6. profit
7. limited government involvement

Question 22

what is the result of businesses selling goods and services to the product market?

Answer 22

they collect business revenue

Question 23

what is the result of the factor market buying productive resources from businesses?

Answer 23

businesses give payments for resources

Question 24

what is the result of households getting capital and entrepreneurs from the factor market?

Answer 24

households provide land and labor

Question 25

what is the results of the product market buying goods and services from Households?

Answer 25

product market gets consumer spending

Question 26

what is the result of the government giving benefit payments to households?

Answer 26

the government gets tax payments

Question 27

what is the result of the government buying goods and services from businesses?

Answer 27

the government gets tax payments

Question 28

what is the result of households buying goods and services from businesses?

Answer 28

households get wage and salary programs

Question 29

who wrote the communist manifesto?

Answer 29

karl marx