Quiz 2 Flashcards
No other economist has had as much influence as
Adam Smith
was born in Scotland in 1723 and student and later taught, literature, logic and moral philosophy
Adam Smith
In Smith challenged the ideas of mercantilism being economically sound
The Wealth Of Nations
is a system by which the government of the homeland controlled trade with its colonies
Mercantilism
A _____ would be wealthier if it engaged in free trade
Nation
reasoned that people behave in ways that satisfy their economic self-interest
Smith
A ____ guides the marketplace
“Invisible Hand”
The _____ as well as other principles outlined in the Wealth of Nations became the foundation of modern economic theory
“Invisible Hand”
Advantages of Traditional Economies
Traditional economies clearly answer three economic questions
They produce what best ensures its survival
The methods of production are the same as they always been
Systems of distribution are determined by custom or tradition
Little disagreements over economic goods and roles
Disadvantages of traditional economies
Because they are based on ritual and customs, they resist change
They are less productive than they might be if they adopt new approaches
They prevent people from doing the jobs they want to do or best suited to do
Very low standards of living
A system in which the society’s leaders, usually members of the central government, make all economies decisions is called a
centrally planned economy
Modern societies that have adopted command economies have done so largely because of the influence of
Karl Marx
predicted that in time, the workers would overthrow this system and transfer ownership of the factories to public hands
Marx
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 production and there is little or no political freedom
Communism
