Economic Systems Flashcards
Scarcity
The limited supply of something
3 basic economic questions
WHAT goods/services will be produced?
HOW will goods/services be produced?
WHO will consume the goods/services?
Traditional Economy
All economic decisions are based on customs, traditions, beliefs
Bartering
Trading without using money
Command Economy
All economic decisions are made by the government.
Market economy
Economic decisions are made based on the changes in prices that occur as buyers & sellers interact in the market place
Free enterprise makes what decisions?
Free enterprise = competition between companies
Most democratic countries have some characteristics of both systems, so we keep it simple and call them
Mixed!
Economic Continuum
How economically free a country is on a scale 0-100
Nation-state
A country with a government
Communism
Everyone is equal and all property is communally owned
Capitalism
Everything is privately owned and ruled by free competition
Human Resources
Workers and their skills
Supply and Demand
The amount of a product and people’s willingness or ability to purchase it
