Economic Dimensions Flashcards
Demand Side/Keynesian Economics
Saving in good times (hands off), and spending in bad times (intervention).
Economic policies that favour the consumer.
Trickle-down/Supply-Side Economics
Cut taxes on big businesses, and the extra money can be spent on workers.
Economic policies of Reagan and Thatcher.
Free-Market Economic Systems
An economy where all resources are owned by individuals.
Private ownership, freedom of choice, self-interest, buying and selling platforms, competition, and limited government intervention.
Mixed Economic System
A system that combines aspects of both capitalism and socialism.
Public and private ownership of industry, market-based allocation with economic planning, and free markets with state interventionism.
Command Economic System
Rather than letting market forces dictate the production of goods and services, the government determines priorities and controls production and pricing.
Public Vs Private Enterprise
A public company has sold all or a portion of itself to the public while a private company is owned by the company founders, management, or group of private investors.
Privatization
The process by which a piece of property or business goes from being owned by the government to being privately owned.
Socialism
A political economic system in which property and the means of production are owned in common, typically controlled by the state or government.
John Maynard Keynes
Save less and spend more, raising their marginal propensity to consume to effect full employment and economic growth.
Marginal Propensity to Consume
A metric that quantifies induced consumption.
The concept is that the increase in personal consumer spending occurs with an increase in disposable income.
Roosevelt’s New Deal
FDR’s response to the great depression, advocated for more government intervention in a demand-side kind of way.
Relief, recovery, reform.
Demand Side Economics
The theory that the demand for goods and services drives economic activity.
Laissez-Faire Capitalism
An economic philosophy of ree-market capitalism that opposes government intervention.
Collusion
A non-competitive, secret, and sometimes illegal agreement between rivals which attempts to disrupt the market’s equilibrium.
Characteristics of a Capitalist Economy
The two-class system, private ownership, a profit motive, minimal government intervention, and competition.
Characteristics of a Socialist Economy
Features social rather than private ownership of the means of production.
Levels of Government Involvement in an Economy
- Provides the legal and social framework within which the economy operates.
- Maintains competition in the marketplace.
- Provides public goods and services.
- Redistributes income.
- Takes certain actions to stabilize the economy.
Government Subsidies
Financial grants are extended by the government to private institutions or other public entities to stimulate economic activity or promote activities that are in the public good.
Ex. Government buys a portion of the gas so that individual companies can pay the rest.
Free Enterprise
Private businesses which operate largely without state control.
Income Disparity
How unevenly income is distributed throughout a population.
Neo-Conservatism
Endorses free markets and capitalism, favouring supply-side economics, and reduced but not eliminated welfare states.
Believe that free markets do provide material goods in an efficient way, but lack moral guidance.
Return to classical liberalism
Stagflation
When money is pumped into the economy during a recession and it does not promote recovery and only results in inflation.
Inflation
When spending and incomes rise faster than the production of goods and services, this results in rising prices.
Fiscal Policy
Managed by government to improve economic output.
