Unit 2 Flashcards
Describe a mixed economy.
A mixed economy, also known as a modified free enterprise system, falls between a market economy and a centrally planned economy, combining government intervention and private enterprise.
Define a centrally planned economy.
A centrally planned economy, also known as communism or a command economy, is one where the government controls all elements of the economy, including prices, wages, and production, and provides education, health care, employment, and housing to all members of society.
How does a market economy function?
In a market economy, also known as capitalism or private enterprise, economic decisions are determined by free competition, where businesses, consumers, and government act independently, and market forces and self-interest dictate what goods are created and sold.
What role do consumers play in economic systems?
Consumers, along with producers and government, play a role in making decisions about the production, distribution, and consumption of goods and services in an economy.
Explain the concept of economic systems.
An economic system is a particular set of social institutions that deals with the production, distribution, and consumption of goods and services in a society.
Identify a key characteristic of a market economy.
A key characteristic of a market economy is that corporations and individuals are encouraged to own private property and profit belongs to business owners.
How do market forces influence a market economy?
Market forces influence a market economy by determining what goods are created and sold based on competition, consumer preferences, and self-interest.
What are the three fundamental questions considered in economics?
The three fundamental questions in economics are: Who consumes what is produced? Who should receive the limited supply of resources? Who should benefit from economic activities?
Describe the competition in a market economy.
In a market economy, companies compete in terms of quality, services, price, reputation, and warranties, which drives innovation and consumer choice.
How does government intervention manifest in a mixed economy?
In a mixed economy, government intervention can include regulations, subsidies, and public services that coexist with private enterprise.
What is an example of a market economy?
The USA is often cited as a prime example of a market economy.
Explain the role of producers in economic systems.
Producers, or businesses, play a crucial role in economic systems by making decisions about what to produce, how to produce it, and for whom to produce.
How do autocratic systems differ from democratic systems?
Autocratic systems are governed by a single individual or a small group with unlimited power, while democratic systems involve governance by all eligible members of the population through elected representatives.
How does a mixed economy function regarding property ownership?
In a mixed economy, property is owned by individuals, corporations, or the government.
Describe the three fundamental questions that economics considers.
Economics considers how goods are produced, what is produced, and for whom goods are produced.
Define economics in the context of decision-making.
Economics is the study of how people make decisions in a world where wants are unlimited but resources are limited.
What characterizes a democracy in terms of governance?
A democracy is characterized by governance through elected representatives, free and fair elections, the rule of law, free speech and press, the right to assembly, and freedom of religion.
Explain the role of competition in a mixed economy.
In a mixed economy, strong competition among corporations is encouraged, while profits are taxed to support government projects and programs.
What are some examples of countries with autocratic political systems?
Examples of autocratic political systems include China, Cuba, and North Korea.
How should resources be allocated when they are limited, according to economic principles?
When resources are limited, decisions must be made about whether to build schools, repair highways, or construct recreational centers, among other priorities.
Describe the implications of pollution in production processes.
Economics considers how much pollution should be allowed when firms produce goods, balancing production needs with environmental concerns.
What is a key concern for politicians in a democratic system?
In a democratic system, politicians may be more concerned with re-election than with the overall good of the country.
Describe a mixed economy and provide an example.
A mixed economy is an economic system that combines elements of both capitalism and socialism. An example of a mixed economy is Canada, where both private enterprise and government involvement coexist.
Define a traditional economy.
A traditional economy is an economic system where traditions and customs govern economic decisions, and activities are often centered around family, tribe, or ethnic groups, with resources allocated based on inheritance.
How do resources get allocated in a traditional economy?
In a traditional economy, resources are allocated based on inheritance and the customs of previous generations, often through farming, hunting, and gathering.
How does demand influence production decisions in a market economy?
In a market economy, demand influences production decisions as businesses respond to consumer preferences, adjusting their output to maximize profits based on what is currently in demand.
What role does government play in a mixed economy?
In a mixed economy, the government may act as a competitor, regulator, or provider of services, balancing the interests of private enterprise with public welfare.
How does a centrally planned economy operate?
In a centrally planned economy, property ownership is restricted, all profits belong to the government, all workers are employed by the government, and the government determines price, quality, style, and amount of goods and services.
Define a market economy.
A market economy is an economic system where business owners make most economic decisions based on market conditions, without government intervention, as long as they follow fair trade policies.
What are some characteristics of a mixed economy?
A mixed economy combines elements of both market and centrally planned economies, allowing for some government intervention while also enabling private ownership and market-driven decisions.
Explain the relationship between economic systems and political systems.
The economic system of a country is closely linked with its political system, which can be based on various forms such as religion, monarchy, aristocracy, democracy, or autocracy.
What happens to profits in a centrally planned economy?
In a centrally planned economy, all profits belong to the government.
Describe the term ‘economics’.
Economics is the study of how individuals and societies allocate scarce resources to satisfy their needs and wants.
Identify the role of competition in a centrally planned economy.
In a centrally planned economy, competition is limited as the government controls the production and distribution of goods and services.
List some types of political systems.
Types of political systems include Theocracy, Monarchy, Aristocracy, Democracy, and Autocracy.
How do business owners in a market economy make production decisions?
Business owners in a market economy make production decisions based on market demand and conditions, often timing their releases to maximize profit.
Define ‘market economy’.
A market economy is an economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices are determined in a free price system.
Explain the concept of ‘opportunity cost’.
Opportunity cost refers to the value of the next best alternative that is forgone when making a decision.
Assess the impact of economic systems on daily life.
Economic systems affect daily life by influencing job availability, income levels, and the prices of goods and services.
Analyze the differences between developed and developing countries.
Developed countries typically have advanced economies, high GDP per capita, and better living standards, while developing countries often face economic challenges and lower living standards.
Describe the role of corporations in international policy.
Corporations can influence international and domestic policy through lobbying, advocacy, and by shaping public opinion on economic issues.
What is a mixed economy?
A mixed economy is an economic system that incorporates elements of both market and centrally planned economies.
Explain the term ‘gross domestic product (GDP)’.
Gross Domestic Product (GDP) is the total monetary value of all finished goods and services produced within a country’s borders in a specific time period.
Define ‘absolute advantage’.
Absolute advantage is the ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group.
Describe the concept of ‘lobbying’.
Lobbying is the act of attempting to influence the decisions of government officials, often by special interest groups or corporations.
Analyze the business cycle.
The business cycle refers to the fluctuations in economic activity that an economy experiences over time, typically characterized by periods of expansion and contraction.
How do political systems influence economic systems?
Political systems influence economic systems by determining the rules and regulations that govern economic activity, including property rights, taxation, and trade policies.
Evaluate the advantages of a centrally planned economy.
Advantages of a centrally planned economy include the ability to quickly mobilize resources for large projects and the potential for equitable distribution of wealth.
What is the significance of comparative advantage?
Comparative advantage is significant because it explains how countries can benefit from trade by specializing in the production of goods where they have a lower opportunity cost.
Describe the characteristics of underdeveloped countries.
Underdeveloped countries often have low GDP per capita, high poverty rates, limited access to education and healthcare, and reliance on agriculture.
How do geographic factors influence international business?
Geographic factors influence international business by affecting transportation costs, access to resources, and market accessibility.
Assess the impact of Canadian government initiatives on international trade.
Canadian government initiatives can impact international trade by promoting exports, negotiating trade agreements, and implementing tariffs or trade barriers.
Describe the business cycle.
The business cycle refers to recurring periods of increased and decreased economic activity, characterized by four stages: recession, trough, expansion, and peak.
Define the recession stage of the business cycle.
Recession is defined as two consecutive quarters of GDP decline, during which the economy slows down, consumer purchasing declines, unemployment increases, and businesses may contract or close.
What occurs during the trough stage of the business cycle?
During the trough stage, production and unemployment reach their lowest levels, marking the end of the recession and the beginning of a turn towards prosperity.
