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Econ/AP Gov > ECON: Unit 1: Ch. 2 > Flashcards

ECON: Unit 1: Ch. 2 Flashcards

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0
Q

factor payments

A

the income ppl receive for supplying factors of production (land, labor, capital, or entrepreneurship)

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1
Q

economic system

A

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

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2
Q

3 key economic questions

A
  1. What goods/services should be produced? (opportunity cost)
  2. How should these goods/services be produced? (which capitals)
  3. Who consumes these goods and services? (distribution of income)
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3
Q

safety net

A

set of government programs that protect ppl from experiencing unfavorable economic conditions

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4
Q

standard of living

A

level of economic prosperity

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6
Q

traditional economy

A

relies on habit, custom, or ritual to decide what to produce, how to produce it, to whom to distribute it
-revolves around family, small close communities, slow to adapt, have a low standard of living

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6
Q

market economies

A

economy decisions are made by individuals and are based on exchange or trade
-AKA free market/capitalism

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7
Q

mixed economy

A

market-based econ. systems in which gov. plays a limited role

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8
Q

market economies

A

economy decisions are made by individuals and are based on exchange or trade

  • AKA free market/capitalism
  • leads to efficient use of resources including capital, land, and labor
  • represented by a circular flow diagram (supply and demand)
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9
Q

specialization

A

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

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10
Q

circular flow diagram

A

shows how individuals and businesses exchange money, resources, and products in the marketplace (inner ring of diagram= flow of resources and products, outer ring= flow of money

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11
Q

why do markets exist?

A

because no one is self-efficient, none of us can produce all we require to satisfy our needs/wants

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12
Q

household

A

A person or group living in the same residence

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13
Q

players in the free market economy?

A

households and firms

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14
Q

business/firm

A

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

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15
Q

Firms purchase factors of production from?

A

households (this area of exchange= factor market

16
Q

profit

A

financial gain made in a transaction

17
Q

self-interest

A

their own personal gain

18
Q

incentive

A

the hope of reward or the fear of punishment that encourages a person to behave in a certain way

19
Q

2 Self-Regulation Natures of the Marketplace

A

self-interest ( motivating force) and competition( regulating force)

20
Q

competition

A

economist call this struggle among producers for dollars of consumers

22
Q

Advantages of the free market include…

A

-Econ efficiency( responds well to rapidly changing conditions)
-Econ freedom( work where you want, firms produce what they want, individuals consume what they want)
-Econ growth( cause competition encourages innovation, free markets encourage growth)
-Additional Goals( cause producers have incentives to meet consumers desires, consumers decide what gets produced basically, aka consumer sovereignty)
CONS: No economic equity or security

23
Q

socialism

A

a social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout society
-purpose to achieve economic equality

24
Q

authoritarian

A

a type of gov. that requires strict obedience to an authority such as a dictator

25
Q

collectives

A

large farms leased from the state to groups of peasant farmers

26
Q

communism

A

characterized by a centrally planned economy w/ all economic and political power vesting in the hands of the central gov.
-authoritarian: exact strict obedience with no freedom of judgement and action

27
Q

7 economic goals and societal values

A
  1. economic efficiency: using resources wisely
  2. economic freedom: laws that forbid purchases
  3. economic security: welfare, unemployment
  4. economic predictability: reassurance that goods and services will be available when needed and receive expected payments on time
  5. equity: what constitues a fair share/higher vs lower paying job
  6. growth and innovation: must grow to improve standard of living
  7. full employment: everyone who wants a job will get a job
    etc: environmental protection, medical care
28
Q

Centrally planned economies (good and bad)

A
  • operate in contrast to free market systems, oppose private property, free market pricing, competition, and consumer choice
    good: jump start industries/guarantee jobs and income
    bad: poor quality, serious shortages of non-priority goods/services, diminishing production, performance almost always falls shorts of ideals, workers lack incentive, sacrifice individual freedoms to pursue societal goals
29
Q

laissez faire

A

bitch you know this but… the doctrine that gov. shouldn’t intervene in the marketplace

30
Q

private property

A

property that is owned by individuals or companies, not by the gov. Or the ppl as a whole

31
Q

free enterprise

A

an economic system characterized by private or corporate ownership of capital goods

32
Q

transition

A

period of change where economy moves away from centrally planned economy toward a market-based system
-to do, state firms must be privatized or sold to people and allowed to compete in the marketplace

33
Q

factor market

A

firms purchase factors of production from households

34
Q

product market

A

goods and services that firms produce and are purchased by households

35
Q

former soviet union

A
  • led by vladmir lenin, communist
  • agriculture: collectives: large farms leased from state to peasant farmers were instructed by government what to produce
  • industry: defense, space, machinery
  • focus on quantity, not quality
  • lack of incentives
  • consumers: waited hours to purchase, lack of housing
  • end: communism collapsed and russia sought western style democracy, faced corruption, money problems
36
Q

modern economies

A
  • limits of laissez fair bc they need gov intervention for hwys, edu, private property etc
  • balance control and freedom: taxes, army, unemployment, minimum wage
  • circular flow model
37
Q

circular flow model

A
  • gov in factor market: purchases land, labor, capital from households
  • gov in production market: purchases goods and services, provides certain goods
  • gov transferring money: collects taxes

Econ/AP Gov (16 decks)

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