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Chapter 2 Econ
Chapter 2 - Economic Systems
| Question | Answer |
|---|---|
| The structure of methods and principles that a society uses to produce and distribute goods and services. | Economic systems |
| 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 ideas into use. | Innovation |
| An economic system that relies on habit, custom, or ritual to decide the three key 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 key economic questions are based on voluntary exchange in markets. | Free market economy |
| A person or group of people living in a singe residence. | Household |
| An organization that uses resources to produce a product or service, which it then sells. | Firm |
| The arena of exchange in which firms purchase that factors of production from households. | Factor market |
| The arena of exchange in which households purchase goods and services from firms. | Product market |
| An individual's own personal gain. | Self-interest |
| The hope of reward or fear of penalty that encourages a person to behave in a certain way. | Incentive |
| The struggle among producers for the dollars of consumers. | Competition |
| A term coined by Adam Smith to describe the self-regulating nature of the marketplace. | Invisible Hand |
| The power of consumer to decide what gets produced. | Consumer soverignty |
| An economic system in which the government makes all decisions on the three key economic questions. | Centrally planned economies |
| Another name for a centrally planned economy. | Command economy |
| A range of economic and political systems based on the belief that wealth should be 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 economic decisions. | Communism |
| Describes a form of government that limits individual freedoms and requires strict obedience from its citizens. | Authoritarian |
| The doctrine that government generally should not intervene in the marketplace. | Laissez-faire |
| Property that is owned by individuals or companies, not by the government or the people as a whole. | Private Property |
| A market-based economic system in which the government is involved to some 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 allowed them to compete in the marketplace. | Privatization |
| An economic system characterized by private or coroporate ownership of capital goods. | Free Enterprise System |
Created by:
Swader
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