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Econ Chapter 2 Vocab
Economic Systems & Decision Making
| Term | Definition |
|---|---|
| Economic System | organized way in which a society provides for wants and needs of its ppl |
| Traditional Economy | economic system in which allocation of scarce resources and other economic activities are based on ritual, habit, or custom |
| Command Economy | economic system with a central authority that makes the major economic decisions |
| Market Economy | economic system in which supply, demand, and the price system help ppl make economic decisions and allocate resources |
| Market | meeting place or mechanism that allows buyers and sellers to come together |
| Capitalism | economic system in which private citizens own and use the factors of production in order to generate profits |
| Mixed Economy | economic system that has some combination of traditional, command, and market economies |
| Socialism | political and economic system in which gov owns and controls some factors of production |
| Communism | economic and political system in which all factors of production are collectively owned and controlled by the state |
| Minimum Wage | lowest wage that can be paid to most workers |
| Social Security | federal program of disability and retirement benefits that covers most working people (a New Deal program) |
| Inflation | rise in the general level of prices |
| Fixed Income | income that does not increase even though prices go up |
| Free Enterprise | capitalistic economy in which competition is allowed to flourish with a minimum of government interference |
| Voluntary Exchange | act of buyers and sellers freely and willingly engaging in market transactions |
| Private Property Rights | fundamental feature of capitalism that allows individuals to own and control their possessions as they wish |
| Profit | extent to which persons or organizations are better off financially at end of a period than they were at beginning |
| Profit Motive | incentive that encourages ppl and organizations to improve their financial and material well-being |
| Competition | the struggle among sellers to attract consumers |
| Consumer Sovereignty | role of consumer as ruler of the market when determining types of goods and services produced |
| Mixed/Modified Free Enterprise Economy | economy where ppl carry on their economic affairs freely but are subject to some gov intervention and regulation |
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