Personal & Family Finance Flashcards
Economic System-
A structure within a society that organizes the production, distribution, and consumption of goods & services.
Economy -
“The range of economic activity in a country, region, or community.”
Economics -
The study of the ways in which money is created & used in society.
Gift Economies -
Consists of situations where goods and services are exchanges without an expected or immediate return.
Barter Systems -
Feature a direct exchange of goods without the use of money or another medium of exchange.
Market Economies -
Prices of services & goods are determined through a free system.
Drawback = they tend to create extreme divisions between wealthy & poor.
Laissez-Faire (Free Enterprise) -
A pure market economy where there is no governmental presence in transactions. The economy does not include things like taxes, tariffs, or any type of regulation.
Supply & Demand -
Market economies operate on this principle. Thought to “regulate” itself without any outside help from the government or other entities.
Planned economies -
Prices of goods & services are determined by the government or state.
Mixed economies -
Have a mixture of planned & market economy.
Socialist economy-
The government operates as the central authority, guiding the economy & controlling(owning) many of the businesses. Goods & services are produced for use instead of profit, planned by government.
Goal is to satisfy the needs of citizens without overproduction or creating a surplus of goods.
Is slower to implement or develop technological or other changes since government approval & planning would be needed to do so.
Consumers have less access to desired goods versus those they need.
Capitalism -
One form of market economy.
Characterized by privately owned businesses ( or means of production) that are in making a profit.
What do you need in order to produce goods in a capitalist society?
Capital, labor & resources.
Capital -
Refers to goods & tools used to make products.
Labor -
Refers to human ability to produce goods or services, & include not only physical labor but also talent & skills.
Resources -
Refers to things like land, minerals, forests, oil, & anything else that can be used to make goods.
How is income produced in a capitalist society?
- Through the wages that an individual earns for his/her work.
- In the form of profit or money produced above the cost to make a product.
Industrial Revolution -
Fed into capitalist economy as it allowed companies to mass produce products (which can sometimes lower the cost of producing those items & encourage consumerism)
Anti-trust suits -
Used to encourage competition in a particular industry and to break up monopolies.
Monopolies-
Occur when one company had complete control over a particular product or industry.
Global trade -
The transportation and exchange of goods, services, resources, & money across the international borders. Allows other counties access to things that they might not have or produce in their own country & allows them to export goods or natural resources of which they have a surplus.
Tariffs-
Taxes that are levied on imports/exports.
Some countries may have trade agreements that reduce or eliminate tariffs to encourage trade.
Some countries may increase tariffs in order to deter a particular good from entering another country or reduce the profits of business from other countries
