Chapter Two Vocabulary: Economic Systems Flashcards
Economic System
the method used by a society to produce and distribute goods and services
Factor Payments
the income people receive for supplying facts of production, such as land, labor, or capital
Patriotism
the love of one’s country; the passion that inspires a person to serve his or her country
Safety Net
government programs that protect people experiencing unfavorable economic conditions
Standard of Living
level of economic prosperity
Traditional Economy
economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
Market Economy
economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets
Centrally Planned Economy
economic system in which the central government makes all decisions on the production and consumption of goods and services
Command Economy
economic system in which a central authority is in command of the economy; a central planned economy
Mixed Economy
market-based economic system with limited government involvement
Market
an arrangement that allows buyers and sellers to exchange things
Specialization
the concentration of the productive efforts of individuals and firms on a limited number of activities
Household
a person or group of people living in the same residence
Firm
an organization that uses resources to produce a product, which it then sells
Factor Market
market in which firms purchase the factors of production from households
