Chapter Two Vocabulary: Economic Systems Flashcards

1
Q

Economic System

A

the method used by a society to produce and distribute goods and services

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2
Q

Factor Payments

A

the income people receive for supplying facts of production, such as land, labor, or capital

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3
Q

Patriotism

A

the love of one’s country; the passion that inspires a person to serve his or her country

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4
Q

Safety Net

A

government programs that protect people experiencing unfavorable economic conditions

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5
Q

Standard of Living

A

level of economic prosperity

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6
Q

Traditional Economy

A

economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services

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7
Q

Market Economy

A

economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets

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8
Q

Centrally Planned Economy

A

economic system in which the central government makes all decisions on the production and consumption of goods and services

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9
Q

Command Economy

A

economic system in which a central authority is in command of the economy; a central planned economy

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10
Q

Mixed Economy

A

market-based economic system with limited government involvement

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11
Q

Market

A

an arrangement that allows buyers and sellers to exchange things

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12
Q

Specialization

A

the concentration of the productive efforts of individuals and firms on a limited number of activities

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13
Q

Household

A

a person or group of people living in the same residence

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14
Q

Firm

A

an organization that uses resources to produce a product, which it then sells

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15
Q

Factor Market

A

market in which firms purchase the factors of production from households

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16
Q

Profit

A

the financial gain made in a transaction

17
Q

Product Market

A

the market in which households purchase the goods and services that firms produce

18
Q

Self-Interest

A

one’s own personal gain

19
Q

Incentive

A

an expectation that encourages people to behave in a certain way

20
Q

Competition

A

the struggle among producers for the dollars of consumers

21
Q

Invisible Hand

A

term economists use to describe the self-regulating nature of the marketplace

22
Q

Consumer Sovereignty

A

the power of consumers to decide what gets produced