Econ Ch. 6-7 Test Flashcards
5 main points of Mercantalism
1) Explore (3 G’s: God, gold, and glory)
2) Positive Trade
3) High domestic manufacturing
4) Colonize
5) Alliances/Treaty
Main beliefs of mercantalism
An early economic system that focused on wealth being found in gold/silver
Who was Adam Smith?
pro-laissez faire/ anti-mercantalist believer
Wrote Wealth of Nations in 1776
Said silver and gold did not equal wealth
Said true prosperity is when a nation’s people are prosperous
“Father of Laissez-Faire economy”
Said money does not equal wealth because money is means to an end and not the end itself
What is the invisible hand
Smith believed that an invisible hand guided the market to healthy balance of supply and demand
Which economic system has individuals own and answer
Radical Capitalism
Which economic system has individuals with minimum government ownership (own) and individuals with some government decisions (answer)
Classic Liberalism
Which economic system has individual and government moderate ownership (own) and both individuals and government making decisions (answer)
State Capitalism
Which economic system has government owning key industries and individuals own the rest (own) and government making major decisions and individuals making small decisions (answer)
Social Democracy
Which economic system has government owning and answering
Centralized Socialism
Which economic system has all citizens owning and answering equally
Utopian Communism
Order of chart (prob not how it will be on test but)
Radical Capitalism Classical Liberalism State Capitalism Social Democracy Centralized Socialism Utopian Communism
Pros/Cons of Sole Proprietorship (one owner)
Pros: Freedom in the market, less outside control, less info sharing, lower taxes, own boss
Cons: hold all liability, limited management skills, limited employee skills, limited life, limited funds
Pros/Cons of General Partnership (2+ owners)
Pros: more management skills, longer lasting employees, more financing sources, relatively easy to form/manage
Cons: both liable, short business life due to conflict,
Pros/Cons of Limited Partnership
One partner has unlimited personal financial liability
one partner invests and has the right to inspect books and profit, but no decision making or management responsibilites
Pros/Cons of Corporation
Pros: limited liability, experienced management, specialized employees, continuous life, easy to raise $
Cons: pay more in taxes, greater government regulation, lack of secrecy, impersonal, rigid/less flexible,
People can buy stock and own
Can be public or private
Private Corporation
Individuals own (ex. Disney, Apple)
Public Corporation
General public owns, managed by government (ex. TVA)
What is an LLC?
It combines the benefits of a corporation with those of a partnership.
Like corp: owners not liable for for acts and debts
Like part: lower taxes, less burdensome reporting requirements
Pros/Cons of LLC
Pros: Can be created by one person, any number of shareholders, members dont have to meet on regular schedule, governed by operating agreement
Cons: difficult to raise money, special tax in some states, operating agreement must be flawless or else legal trouble
When a nation has more coming in than going out
Favorable balance of trade
“let alone”, government stays out of the individual and allows them to seek own profit
Laissez-faire
Goods and services that benefit all or nearly all of a nations people and that private firms or individuals would not choose to produce because they could not do so profitably
Public Good
Nation’s government assumes ownership of companies on a large scale
Nationalization (often found in socialism)
Where Karl Marx argued that any arrangement of the tools of production short of total state ownership would be counterproductive
Communist Manifesto
