Economic Terms Flashcards

1
Q

What is laissez-faire capitalism?

A

An economic system with no government intervention, where businesses and individuals operate freely without regulation, taxation, or government control.

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2
Q

What is the economic spectrum?

A

The range from no government involvement in the economy (laissez-faire capitalism) to total government control (communism).

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3
Q

Why does pure laissez-faire capitalism not exist in reality?

A

Because some government regulation is always necessary to enforce contracts, protect property rights, and prevent fraud or abuse.

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4
Q

What is communism?

A

An economic system where the government controls all businesses, industries, and resources, eliminating private property and distributing wealth based on need.

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5
Q

What are four common problems associated with communist economies?

A

Inefficiency, lack of innovation, economic stagnation, and restrictions on individual freedoms.

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6
Q

What is regulated capitalism?

A

A system where markets operate freely but with some government oversight to regulate monopolies, enforce labor laws, and provide public services.

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7
Q

How does regulated capitalism balance economic growth and fairness?

A

It allows markets to drive growth while using government intervention to prevent exploitation and market failures.

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8
Q

What is social democracy?

A

A system that maintains capitalism but includes extensive government involvement to ensure social welfare and reduce economic inequality.

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9
Q

How do social democracies fund public services?

A

Through higher taxes, particularly on the wealthy, to provide healthcare, education, and unemployment benefits.

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10
Q

What is the main debate in economic policy?

A

The balance between market efficiency and social fairness—how much government involvement is necessary in the economy.

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