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Economics > Economic Systems > Flashcards

Economic Systems Flashcards

1
Q

What are the two basic types of economics?

A

Micro and Macro Economics

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2
Q

What is the study of individuals, families. and businesses in the economy?

A

Microeconomics

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3
Q

What is the study of the economy as a whole and is concerned with large-scale economic activity?

A

Macroeconomics

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4
Q

What studies economics behavior as it is?

A

Positive Economics

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5
Q

What involves judgements of what economic behavior ought to be?

A

Normative Economics

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6
Q

What are the three economic questions?

A

What will be produced?
How will it be produced?
For whom will it be produced?

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7
Q

What is the way a society uses its resources to satisfy its people’s unlimited wants?

A

Economic System

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8
Q

What are the three basic types of economic systems?

A

Traditional, Command, and Market Economies

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9
Q

What is an economic system in which families, clans, or tribes make economic decisions based on customs and beliefs that have been handed down from generation to generation?

A

Traditional Economy

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10
Q

What is the one goal of a Traditional Economy?

A

Survival

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11
Q

In _____, the govt. decides what goods and services will be produced, how they will be produced, and how they will be distributed.

A

Command Economy

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12
Q

In a command economy, the _____ decides what goods and services will be produced, how they will be produced, and how they will be distributed.

A

Government

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13
Q

Government officials consider what two things of the country and allocate those resources according to their judgement?

A

Resources and Needs

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14
Q

What is based on individual choice, not govt. directives?

A

Market Economy

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15
Q

In a market economy, what two things drive the economy?

A

Consumers and Producers

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16
Q

_____ decide what goods or services they will offer.

A

Producers

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17
Q

Individuals act in their own ______ when they make economic choices.

A

Self-Interest

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18
Q

Who was born in Scotland, in 1723 and studied, and later taught, literature, logic, and moral philosophy?

A

Adam Smith

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19
Q

Where was Smith born?

A

Scotland

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20
Q

What year was Smith born?

A

1723

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21
Q

What did Smith learn and later teach?

A

Literature, logic, and moral philosophy

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22
Q

In what book did Smith challenge the ideas of mercantilism being economically sound?

A

Wealth of Nations

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23
Q

What is a system by which the govt. of the homeland controlled trade with its colonies?

A

Mercantilism

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24
Q

A nation would be wealthier if it engaged in what?

A

Free Trade

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25
Q

People behave in way that satisfy their what?

A

Economic Self-Interest

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26
Q

What guides the marketplace?

A

Invisible Hand

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27
Q

What as well as other principals outlined in the Wealth of Nations became the foundation of modern economic theory?

A

Invisible hand

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28
Q

What are some advantages of traditional economies?

A

Traditional economies clearly answers the three economic questions

They produce what best ensures its survival

The methods of production are the same as they always have been

Systems of distribution are determined by custom or tradition

Little disagreement over economic goals and roles

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29
Q

What are some disadvantages if traditional economies?

A

Because they are based on ritual and customs, they resist change

They are less productive than they might be if they adopted new approaches

They prevent people from doing the jobs they want to do or are best suited to do

Very low standard of living

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30
Q

Government should provide basic healthcare to all citizens (Normative or Positive)

A

Normative

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31
Q

A fall in incomes will lead to a rise in demand for own-label supermarket foods. (Normative or Positive)

A

Positive

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32
Q

What is a system in which the society’s leaders, usually members of the central govt., make all economic decisions?

A

Centrally Planned/Command Economy

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33
Q

Modern societies that have adopted command economies have done so largely because of the influence of who?

A

Karl Marx

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34
Q

Marx predicted that in time, the workers would overthrow this system and transfer ownership of the factories to who?

A

Public Hands

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35
Q

What is an economic system in which the govt. owns some or all of the factors of production?

A

Socialism

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36
Q

What is an economic system in which the govt. owns all of the factors of production and there is little or no political freedom?

A

Communism

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37
Q

Typically communism will become what?

A

Authoritarian

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38
Q

What requires absolute obedience to those in power?

A

Authoritarian System

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39
Q

What is established through the democratic political process rather than through the violent overthrow of the govt.?

A

Democratic Socialism

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40
Q

In what form of socialism does the govt. owns the basic industries, but other industries are privately owned?

A

Democratic Socialism

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41
Q

Who was born in what is now Germany in 1818 and grew up in middle-class comfort?

A

Karl Marx

42
Q

Where was Marx born?

A

Germany

43
Q

When was Marx born?

A

1818

44
Q

He would be what rom his homeland for becoming involved in radical politics?

A

Exiled

45
Q

He would be exiled from his homeland for becoming involved in what?

A

Radical Politics

46
Q

During his travels he met who that was the son of a factory worker?

A

Friedrich Engels

47
Q

Marx concluded that the what had created a system of wage slavery?

A

Industrial Revolution

48
Q

Marx concluded that the Industrial Revolution had created a system of what?

A

Wage Slavery

49
Q

The whole industrial system, Marx reasoned, was based on the what?

A

Exploitation of workers

50
Q

Marx, assisted by Engels, laid out ideas of worker overthrow in what?

A

The Communist Manifesto (1848)

51
Q

Who still has an economy with mostly command elements?

A

North Korea

52
Q

Advantages of Command Economies

A

They seek to provide for everyone

Leaders in a command economy can use the nation’s resources to produce items that may not make money in a market economy

53
Q

Disadvantages of Command Economies

A

Central planners often have little understanding of local conditions

Workers often have little motive to improve their productivity

Often set prices well below those that would be established in a market system

Command economies face shortages

54
Q

Self-interested behavior is behind two features of a market economy

A

Private Property Rights

Market

55
Q

What are the rights of individuals and groups to own businesses and resources?

A

Private Property Rights

56
Q

What is any place where people buy and sell goods and services?

A

Market

57
Q

What is vital to any single sale or exchange?

A

Clear Ownership

58
Q

What are necessary to make markets work properly?

A

Private Property Rights

59
Q

What is the principle that the govt. should not interfere in the economy is called?

A

Laissez Faire

60
Q

What is the concept of laissez faire often paired with?

A

Capitalism

61
Q

What is an economic system that is based on private ownership of the factors of production?

A

Capitalism

62
Q

What is the foundation of market economies, operates in the belief that, on their own, producers will create the goods and services that consumers demand?

A

Capitalism

63
Q

What is a market economy in its pure form?

A

Laissez Faire Capitalism

64
Q

What is a trade in which both traders believe that what they are getting is worth more than what they are giving up?

A

Voluntary Exchange

65
Q

What guides voluntary exchanges?

A

Self-Interest

66
Q

What is considered a financial gain from a business transaction?

A

Profit

67
Q

What is the effort of two or more people, acting independently, to get the business of others by offering the best deal?

A

Competition

68
Q

What is the idea that because consumers are free to purchase what they want and refuse products they do not, they have the ultimate control over what is produced?

A

Consumer Sovereignty

69
Q

What acts as a control on self-interested behavior, guiding the market toward a balance between higher value and lower prices?

A

Competition

70
Q

What is a situation in which people concentrate their efforts in the areas in which they have an advantage?

A

Specialization

71
Q

What removes the need for households to be self-sufficient, and markets allow households to trade for what they need?

A

Specialization

72
Q

What leads to higher-quality yet lower-priced products?

A

Specialization

73
Q

What is a tool that economists use to understand how market economies operate?

A

Circular Flow Model

74
Q

What is the market for goods and services called?

A

Product Market

75
Q

What isn’t a place as much as it is a set of activities?

A

Product Market

76
Q

Who are the suppliers of the product market?

A

Businesses

77
Q

What is the market for the factors of production?

A

Factor Market

78
Q

In a factor market, who owns all factors of production?

A

Individuals

79
Q

In the factor market, who are the customers and who are the producers?

A

Businesses are the customers and individuals are the producers

80
Q

Advantages of Market Economies

A

Freedom is one of the chief advantages of a market economy

Fewer areas of govt. involvement unlike the command economy

A market economy also can be responsive to changes in conditions and accommodate those changes quickly

Individuals in local communities are free to make their own economic choices without the interference of the govt.

The profit motive, a key feature of the market economy, ensures that resources will be allocated efficiently, since inefficiencies would result in lower profits

81
Q

Incentives to come up with good ideas is related to another advantage of a market economy, what is it?

A

Competition

82
Q

What leads to higher-quality products at lower prices and helps create a diverse product market?

A

Competition

83
Q

What is the primary focus of a pure market economy?

A

The economic good of the individual

84
Q

Disadvantages of Market Economies

A

A pure market economy has no mechanism for providing public goods and services ie. National Defense

Pure market economies cannot provide security to those who, because of sickness or age, cannot be economically productive

Nor can it prevent the unequal distribution of wealth, even though the gap may be the result or unequal opportunities

85
Q

What is the most common type of economic system today?

A

Mixed Economy

86
Q

What is an economy that has elements of traditional, command, and market systems?

A

Mixed Economy

87
Q

Although all _______ are mixed, they often emphasize one type of system over another.

A

Modern Economies

88
Q

What type of economy dominates in the U.S?

A

Market Economy

89
Q

Even though there are traditional and command elements, the driving forces of the US economy are what?

A

Private Ownerships and Markets

90
Q

Who tried to find a middle ground between socialism and capitalism?

A

France

91
Q

Who has a mixed economy, but also has much greater govt. involvement?

A

Sweden

92
Q

The Swedish govt. and govt.-related organizations own how much of all Swedish companies?

A

One-third

93
Q

Swedish citizens receive what type of social benefits?

A

“Cradle to Grave”

94
Q

What means to change from private ownership to govt. or public ownership?

A

Nationalize

95
Q

Many economies have moved away from _______ systems to _______ systems?

A

Command Systems to Market Systems

96
Q

What means to change from govt. or public ownership to private ownership?

A

Privatize

97
Q

One way to help privatize an industry is to open it up to what?

A

Foreign Investors

98
Q

Privatizing an industry by opening it up to foreign invaders is a type of economic tie between nations that is only one example of the what?

A

Global Economy

99
Q

What refers to all the economic interactions that cross international boundaries?

A

The Global Economy

100
Q

The global economy refers to all the economic interactions that cross what?

A

International Boundaries

101
Q

What has also been enhanced by cross-border business partnerships?

A

Globalization

102
Q

Globalization has been enhanced by what?

A

Cross-Border Business Partnerships

Economics (4 decks)

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