Economic Systems Flashcards
what are the two basic types of economics?
Microeconomics, Macroeconomics
____________ is the study of family/ individual businesses in the economy
Microeconomics
__________ is the study of economics as the whole word or large scale
Macroeconomics
___________ study of economic behavior
Positive Economics
___________- has judgements on what economic behavior should be
Normative Economics
What are the three economic questions?
who are we making it for?
how
why
_________ the way society uses resources to satisfy wants
economics system
what are the three main types of economic systems?
Traditional
Command
Market Economy
__________ is an economy system in which families base decisions on customs passed down-survival is the goal
Traditional Economy
___________ the government decides what goods and services will be produced
Command Economics
_______________ is based on individual choice, consumer/producers drive economy
Market Economy
Adam Smith wrote ______________ which in it he wrote about people’s self interest
the Wealth of Nations
___________ is a system by which the government of the homeland controlled trade with its colonies
mercantilism
an _____________ guids the marketplace
invisible hand
Advantages for traditional economics
have clear answers
ensures survival
determined by custom
little disagreement over goals and roles
disadvantages for traditional economics
based on customs
less productive
resistant to change
low standard of living
a system in which society’s leaders make all economic decisions is called a _____________
centrally planned economy
____________ is an economic system in which the government owns some or all of the factors of production
socialism
____________ is an economic system in which the government owns all the factors of productions and there is almost no political freedom
communism
______________ require absolute obedience to those in power
authoritarian system
_____________ is established through democratic political process government owns industries but other industries are privately owned
democratic socialism
_________ concluded that the industrial revolution had created a system of wage slavery
marx
___________ assisted by ________ laid out ideas of workers overthrowing the communist manifesto
marx, engels
__________’s economy is is a primarily a command economy
north korea
advantages for command economies
provide for everyone
use nation’s resources to make money
disadvantages of command economics
little understanding of local conditions
little motive to improve productivity
prices are cheap
shortages
_______ is the rights of people to own businesses and resources; are necessary to make markets work right
private property rights*
___________ is the place where people buy and sell goods and services
the market
__________ is vital to any single scale
clear ownership
__________ is an economic system that is based on private ownership of the factors of production
capitalism*
the principal that the government should not interfere with the economy is called _____________
laissez fair*
a _____________ is a trade in which both traders believe that what they are getting is better than what they are giving up- self interest guides
voluntary exchange
__________ is considered a financial gain from a business transaction, a key feature of the market economy
profit
______________ is the effort of two or more people to get the business of others by offering the best deal
incentives to come up with good ideas, leads to better quality product
competition
____________ is the idea that because consumers are free to buy whatever they want and refuse products that they do not
consumer sovereignty
___________ is the situation in which people concentrate their efforts in the areas which they have an advantage- leads to higher/lower priced products
specialization
__________ is a tool that economics use to understand how market economies work - two economic decision makers households and businesses
circular flow model
the market for goods and services is called the _______
product market
the market for the factors of production is __________
factor market*
__________ is the most common economy, has elements of all economic systems
mixed economy
___________ means to change from private ownership to a government or public ownership
nationalize
___________ means to change the government to public or private ownership
privatize
