Econ Vocab 2 Flashcards
Economic System
the way a society uses it’s scarce resources to satisfy its people’s unlimited wants
Traditional Economics
Centers on families, clans or tribes
Command Economics
Government makes economic decisions
Market Economics
Driven by choices of consumers and producers
Centrally planned economy
A system in which the society’s leaders, usually members of the central government make all economic decisions.
Socialism
An economic system in which the government owns some or all of the factors of production.
Communism
more extreme form of socialism in which there is no private ownership of property and little or no political freedom.
Authoritarian
system requires absolute obedience to authority
Private-property rights
rights of individual and groups to own property
Market
place or situation where people buy and sell goods services
Laissez faire
Government should not interfere in economy
Capitalism
system having private ownership of factors of production
Voluntary exchange
traders believe they get more than they give up
Profit
financial gain from business transaction
Competition
Sellers’ efforts to get business by offering best deal
Consumer Sovereignty
Buyers choose products, control what is produced
Specialization
People concentrate their efforts in the activities they do best
Circular flow model
Illustrates how interactions occur in a market
Product market
Market where goods and services bought and sold
Factor market
Market for the factors of production
Mixed Economy
an economic system that that has elements of traditional, command, and market economies
Nationalize
to change from private ownership to government or public ownership.
Privatize
to change from government or public ownership to private ownership
Global economy
all the economic interactions that cross international boundaries
