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ch. 2 economics test
ch.2 economics test
| Question | Answer |
|---|---|
| the structure of methods and principles that a society uses to produce and distribute goods and services | economic system |
| the income people receive in return for supplying factors of production | factor payment |
| the amount of money a business receives in excess of its expenses | profit |
| a set of government programs that protect people who face unfavorable economic conditions | safety net |
| level of economic prosperity | standard of living |
| the process of bringing new methods, products, or idea into use | innovation |
| a economic system that relies on habit, custom, or ritual to decide the three economic questions | traditional economy |
| any arrangement that allows buyers and sellers to exchange things | market |
| the concentration of the productive efforts of individuals and businesses on a limited number of activities | specialization |
| an economic system in which decisions on the three economic questions are based on voluntary exchange in markets | free market economy |
| a person or group of people living in a single residence | household |
| an organization that uses resources to produce or service, which it then sells | firm |
| the arena of exchange in which firms purchase the factors of production from households | factor market |
| the arena of exchange in which households purchase goods and service from firms | product market |
| an individuals own personal gain | self-interests |
| the hope of reward or fear of penalty that encourages a person to behave in a certain way | competition |
| a term coined by Adam Smith to describe the self-regulating nature of the marketplace | invisible hand |
| the power of consumers to decide what gets produced | consumer sovereignty |
| an economic system in which the government makes all decisions on the three key economic questions | centrally planned economy |
| another name for a centrally planned economy | command economy |
| a range of economic and political systems based on the belief that wealth should by distributed evenly throughout a society | socialism |
| a political system in which the government owns and controls all resources and means of production and makes all key economic decisions | communism |
| describes a form of government that limits individual freedoms and requires strict obedience from its citizens | authorization |
| the doctrine that government generally should not intervene in the marketplace | laissez faire |
| property that is owned by individuals or companies, not by government or people as whole. | private property |
| a market-based economic system in which the government is involved to an extent | mixed-economy |
| a period of change in which a nation moves from one economic system to another | economic transition |
| the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the marketplace | privatization |
| an economic system characterized by private or corporate ownership of capital goods | free enterprise system |
Created by:
MrGman200
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