Section 1-4 and Homework Flashcards
The force that encourages people and organizations to improve their material well-being
Profit Motive
The concept that everyone can compete in the marketplace
Open Opportunity
The concept of giving everyone the same legal rights
Legal Equality
The concept that people have the right and privilege to control their possessions as they wish
Private Property Rights
The concept that people may decide what and when they want to buy and sell
Voluntary Exchange
The rivalry among sellers to attract customers while lowering costs
Competition
A private organization that tries to persuade public officials to act or vote according to the group member’s interest
Interest Group
Requiring companies to give customers important information about their products
Public Disclosure Laws
The concerns of the public as a whole
Public Interest
The study of the behavior and decision making of entire economics
Macroeconomics
The study of the economic behavior and decision making small units such as small units, such as individuals, families, and businesses
Microeconomics
The total value of all final goods and services produced in a particular economy
Gross Domestic Product (GDP)
A period of macroeconomic expansion followed by a period of contraction
Business Cycle
A commitment to the value of work and purposeful activity
Work Ethic
The process used to produce a good or service
Technology
A shared good or service for which it would be impractical to make consumers pay individuality and to include non payers
Public Goods
The part of the economy that involves the transactions of the government
Public Sector
The part of the economy that involves the transactions of individuals and businesses
Private Sector
Someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway it if were provided as a public good
Free Rider
A situation in which the market does not distribute resources efficiency
Market Failure
An economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume
Externality
An income level below that which is needed to support families to households
Poverty Threshold
Government aid to the poor
Welfare
Direct payments of money to eligible poor people
Cash Transfers
Goods and services provided for the free or at greatly reduced prices
In-Kind Benefits
What constitutional guaranteed underline the American free enterprise system ?
The Bill of Rights to the United States constitution guarantees certain individual freedoms. For example, freedom of speech and freedom of religion which undermine the american free enterprise system
Explain at least three benefits of the free enterprise
Profit motive, open opportunity, and economic rights
Example of Macroeconomics and microeconomics
Macro-The Great Depression
Micro-the price of milk going up
How does gross domestic product provided a means to analyze economic growth ?
Economists can look at GDP’s and predict a business cycle
How does welfare attempt to raise poor people’s standard of living ?
It doesn’t attempt to raise. The purpose is to provide individuals that have made mistakes or fallen own bad times through chance, the opportunity to pull themselves from their terrible situation
Why does poverty exist in a free market economy ?
People can choose to make their money
What is the difference between cash transfers and in-kind benefits ?
A cash transfer consists of the payment of currency of transferal deposit by one unit to another w/o a counter part
In-kind benefit is a benefit other than received by employees as part of their total compensation package
How is Social Security an example of income redistribution ?
By taking a small amount of earned income and storing over time
What is laissez faire ?
The doctrine that states that government generally should not intervene in the marketplace
Why have some nations begun a transition to free enterprise ?
The people want control what goes on in the marketplace instead of government choosing for them
Why are nations with centrally planned economies sometimes slow to succeed when they privatize industry ?
They don’t want competition between corporations and companies
Compare the U.S. free enterprise system with other economic systems you have read about in this chapter
The U.S. has an economy where the government has limited involvement in the economic system
What benefits might citizens of a centrally planned economy derive from a move toward a market-based system ?
Citizens would gain more economic freedom and consumer choices
