Economic Systems Flashcards
What is something that motivates a person to act in a certain way?
Internal Motives
Which economic goals are most important in a traditional economy?
Economic stability and security.
In the circular flow model, what is a factor payment?
The income people receive for supplying the factors of production: land, labor, capital, or entrepreneurship.
What are the factors of production?
What is used in the production process to produce output.
Which term best describes the fact that we depend on others to produce most of the goods and services we want?
Economic interdependence
What are 3 questions that every economy must answer?
What will be produced, how will it be produced, and how will the output society produces be distributed?
What do you spend when you make a choice?
Opportunity Cost
What are the 6 economic goals?
Efficiency, equity, economic freedom, economic growth, security, and stability.
Which kind of economy is most common today?
Mixed Economy
Why are tradeoffs necessary?
In order to have more of one thing, you have to accept having less of something else
Communist governments are closely related to ____________ economic systems
Centrally Planned
Why are economies most efficient when they have full employment?
No productive resources are left unused.
What is an entrepreneur?
A person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.
What does Adam Smith’s idea of an “invisible hand” represent?
The unseen forces that move the free market economy
What provides the answers to the 3 basic economic questions for a nation or society?
Economic Systems
In a voluntary exchange, why do people give something up?
They expect to be better off after the exchange
What is opportunity cost?
The loss of potential gain from other alternatives when one alternative is chosen.
What is the circular flow in economics?
A model of the economy in which the major exchanges are represented as flows of money, goods, and services, etc. between economic agents.
What is Traditional Economy?
a basic economic system where customs and traditions are the elements that determine the way trade and commerce are performed
What is Demand?
the desire, willingness and ability of consumers to pay a certain price for a product or service at a given period.
What is Command Economy?
one where the government closely controls the economy
What is Capital?
anything that gives its owner value or advantage
What is an economic system?
a means by which societies or governments organize and distribute available resources, services, and goods across a geographic region or country
What is communism?
an economic ideology that advocates for a classless society in which all property and wealth are communally-owned, instead of by individuals.
