Study for Test 1 Flashcards
wrote Wealth of Nations
Adam Smith
used his resources wisely to make gunpowder for President Jefferson
E. I. du Pont
type of economy that is directed by customs and habits
traditional
type of economy that is directed by the government
command
type of economy is directed by an invisible hand
free market
type of economy that a Communist-controlled country would have
Command
type of good that forklift that is used to transport imported goods within a warehouse
capital good
type of good that a computer used for personl home use is
consumer good
term that refers to a person who owns a share of some business that produces goods
capitalist
person who risks his investment of time and money in the management of an economic enterprise
entrepreneur
diligent work directed by intelligence developed under the conditions of freedom is the true source of ________
prosperity
all people are said to be producers, or people who use goods
false
consumers
a mixed economy provides hardly enough to keep society alive
false
subsistence
state capitalism is a system in which the government controls most of the capitalism
true
when a country finds ways to produce more goods from existing resources, the prosperity of the national economy increases
true
the prosperity and efficiency of the free market economy is owed to its foundation of limited government, freedom of enterprise and competition, national resources and …
property rights
the two entities that make the majority of the economic decisions in the free market are private households and private businesses
TRUE
Adam Smith stressed the importance of separating work into individual tasks known as
division of labor
difference in the value of good s that a country sells abroad compared to those is purchases from other countries is
TRADE balance
according to economists, the factors of production are scarce
TRUE
study of specific components within a major economy
microeconomics
establishment of colonies to benefit a mother country
imperialism
mechanism through which people exchange goods
market
intangible item for which people will pay
service
economics system aimed to accumulate stock piles of gold and silver
mercantilism
study of national economics
macroeconomics
material items which people will pay for
goods
quantity of a good for sale a certain price under certain conditions
supply
seeks to show the relationships among the various components of an economy
economic model
amount of a good bought at a certain price under certain circumstances
demand
word that consumers attach to a good
value
let things alone
laissez faire
French group of 18th century economists who believed the market should be guided by rule of nature
physiocrats
founder of Austrian school of economics
carl menger
taxes that the government applies to imported good
tariffs
economics is the study of choices that individuals and societies make concerning the __________, ___________, and __________ of goods
production
distribution
consumption
value associated with any goods are directly related to
scarcity
utility
four factors of production
capital
natural resources
labor
entrepreneurship
5th factor of production
information
Explain how the free market principles found in Adam Smith’s work have helped to shape American history…
- Smith was strong advocate of free market and division of labor
- Founding Fathers applied Smith’s principles to the new country, giving the nation a foundation of freedom
- for over 200 years, Americans have had freedom to buy and sell as they please
- Therefore, they had opportunity and motivation to produce goods as efficiently as possible
- the Result– the US has become one of the most prosperous and powerful countries in the world.
Why did the pilgrims original economic plan fail, and what did they change, and why did this change help them succeed?
- the pilgrims’ original economic system failed bc it did not provide incentive to work to produce goods
- Individuals were treated the same whether they worked or not, making little reason to work
- Production was so low that pilgrims decided to allow private property and give people freedom to work for themselves
- the colony began prospering bc each individual was working to produce their own goods for in order to become prosperous.
