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The US Economy
Midyear Prep
| Question | Answer |
|---|---|
| capitalism | an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets. The essential feature of capitalism is the motive to make a profit. |
| competition | businesses compete to succeed. increases variety, quality, better prices, and innovation in products. exceptions: monopoly, corruption) |
| consumer sovereignty | consumers have power; consumers control the economy (what is produced). you make what consumers want in order to make a profit. exceptions: product is illegal, monopoly |
| eminent domain | gov't can take your property for the greater good |
| free enterprise | free to start any business you like/work at any job you like. doesn't mean it'll work out bc you might not gain anything from it (private property/profits). exceptions: gov't regulation/illegal business |
| private property | you can own things and expect to keep them. exceptions: eminent domain, illegal property, taxes, public property |
| profit | revenue minus cost (net money) |
| profit motive | we want more stuff and that desire drives us to produce (action). bc we can own stuff and keep it, it makes sense for us to want more stuff. exception: volunteering? |
| circular flow | Economy is interconnected, money facilitates trade (and the economy generally), gov't is central and oversees the system |
| gross domestic product (GDP) | what is used to measure an economy; value of all final goods and services produced by our nations economy, measured by spending |
| What are the fundamental principles and goals of the U.S. economy? | Growth, full employment, freedom, price stability, security, equity, efficiency |
| Why can we not pursue all six goals we have for the U.S. economy simultaneously? | Many conflict, doing one may hinder another. |
| What are the strengths of the U.S. economy? | anyone w/resources has freedom of choice (purchases, work), economy is responsive to the people, competition leads to innovation and growth, uses resources well --> people will be employed, motivates workers well |
| What are the weaknesses of the U.S. economy? | monopolies (destroys competition), income/wealth inequality leads to unfairness of opportunity, potential of volatility (market rises and falls), potential for negative externalities |
Created by:
undercoverkookie68
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