Chapter 8 Flashcards
the commitment of resources to a project or purpose that is expected to bring future profit to an investor
investment
one who borrows money or capital
debtor
one who lends money or capital
creditor
an account that allows checks to be written up to the dollar amount that the account holder has deposited
transaction account\checking account
an account holder’s written order that authorizes his bank to withdraw funds from his account
check
a bank account that allows the account holder to earn interest on his deposits
savings account
an account that guarantees a certain interest rate and has a specified maturity date
CD, certificate of deposit
an account that allows limited transactions and pays an interest rate that changes with the demand for loans
money market account
a contract between two parties in which one party protects the other against certain types of loss in exchange for payments called premiums
insurance
an arrangement provided by an individual’s employer for the intent of providing for the employee’s retirement from work
pension plan
the resources corporations gather by selling ownership in their businesses
stocks
a legal entity which is distinct from the people who own it
corporation
equal portions of a corporations stock
shares
if a corporation fails or declares bankruptcy, the individidual stockholders do not personally have to pay the firm’s creditors
limited liabilty
shares of a corporation’s profit
dividends
a document that guarantees the bondholder the amount of his original investment plus a specified rate of interest by a certain date
bond
investment companies that combine the resources of all their shareholders and invest the money in a wide variety of areas
mutual funds
assets that flow easily since they can be converted into other investments or cash without much time or difficulty
liquid investments
What are the 5 factors of production?
- Natural Resources
- Labor
- Capital
- Entrepreneurship
- Information
What is a system in which decisions involving the production, distribution, and consumption of goods are based upon custom, heredity, and caste?
Traditional Economy
What is the centralized authority that determines the production and distribution of goods?
Command Economy
What is the system in which people are free to make their own economic choices?
Free Enterprise Economy
What is a system that combines a good measure of free enterprise in some areas with heavy state regulation in others?
Mixed Economy
What is any work that contributes to the production of goods?
Labor
The labor of free men and women is usually more ________ than the labor of slaves.
Productive
What is an economic system that provides barely enough to keep a society alive?
Subsistence Economy
Anyone who owns producer goods or owns a share of some business that produces goods is a __________
Capitalist
Majority of a nation’s capital is owned and controlled by private individuals and business is known as _____ ______
Private Capitalism
A system in which the owner of much of the nation’s capital is a powerful, centralized apparatus called the collectivist state is ______ ______
State Capitalism
The intelligent direction and supervision of natural and human economic resources is known as ___________
Entrepreneurship
A person who undertakes management of economic enterprises on a bold scale, with some danger of losing his investment of money and time is a __________
Entrepreneur
Capitalism’s basic rights:
- property rights
- freedom of enterprise and competition in a market environment
- limited government
What are the 3 types of property?
- tangible
- financial
- intellectual
Private households and private businesses make the __________ of economic decisions in the free market.
Majority
Free enterprise is only possible in the presence of _______ ________
Limited Government
What model illustrates how resources and products move through the market?
Circular Flow Model
The product market is where what is sold?
Consumer Products
The resource market is where what is sold?
Factors of Production
