Economic Systems

Question 1

Economic System

Answer 1

Method and principles used by a society to produce and distribute goods and services

Question 2

Factor Payment

Answer 2

Income people receive in return for supplying factors of production, such as land, labor, or capital

Question 3

Safety Net

Answer 3

Government programs that protect people experiencing unfavorable economic conditions

Question 4

Standard of Living

Answer 4

Level of economic prosperity

Question 5

Traditional Economy

Answer 5

Economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services

Question 6

Market Economy

Answer 6

Economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets

Question 7

Centrally Planned Economy

Answer 7

Economic system in which the central government makes all decisions on the production and consumption of goods and service

Question 8

Mixed Economy

Answer 8

Economic system that combines traditional and the free market with limited government involvement

Question 9

Specialization

Answer 9

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

Question 10

Household

Answer 10

Person or group of people living in a single residence

Question 11

Firm

Answer 11

Organization that uses resources to produce a product or service, which it then sells

Question 12

Factor Market

Answer 12

Market in which firms purchase the factors or production from the households

Question 13

Profit

Answer 13

Financial gain made in a transaction

Question 14

Product Market

Answer 14

Market in which households purchase goods and services that firms produce

Question 15

Self-Interest

Answer 15

One’s own personal gain

Question 16

Incentive

Answer 16

Expectation that encourages a person to behave in a certain way

Question 17

Competition

Answer 17

Struggle among producers for the dollars of consumers

Question 18

Invisible hand

Answer 18

Term economists use to describe the self-regulating nature of the market place

Question 19

Consumer Sovereignty

Answer 19

Power of consumers to decide what gets produced

Question 20

Socialism

Answer 20

Social and political philosophy based on the belief that democratic means should be sued to evenly distribute wealth throughout a society

Question 21

Communism

Answer 21

Political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government

Question 22

Authoritarian

Answer 22

Requiring strict obedience to an authority such as a dictator

Question 23

Collectve

Answer 23

Large farm leased from the state to groups of peasant farmers

Question 24

Laissez Faire

Answer 24

Doctrine that state that government generally should not intervene in the marketplace

Question 25

Free Enterprise

Answer 25

Economic system characterized by private or corporate ownership of capital goods; investments that are determined by private decision rather than by state control; and determined in a free market

Question 26

Continuim

Answer 26

Range with no clear divisions

Question 27

Transition

Answer 27

Period of change in which an economy moves from a centrally planned economy to a market-based system

Question 28

Privatize

Answer 28

To sell state-run firms to individuals

Question 29

Market

Answer 29

Arrangement that allows buyers and sellers to exchange things