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Economics
Ch 6 Economic Systems
| Term | Definition |
|---|---|
| mercantilism | an economic philosophy commonly held in Europe from the sixteenth to the eighteenth centuries that advocated the accumulation of gold and silver as national wealth |
| favorable balance of trade | the condition experienced when a nation sells more goods abroad than it purchases from foreign nations |
| laissez faire | the idea that the government should generally leave the economy alone and allow the people to seek their own profit |
| capitalism | an economic system in which private individuals own most of the factors of production and make most economic decisions |
| socialism | an economic system in which a central authority, committee, or the people in common generally own the factors of production and make economic decisions |
| radical capitalism | the most extreme form of capitalism in which private citizens own all factors of production and make all economic decisions |
| classic liberal capitalism | the form of capitalism allowing the government only minimal ownership of resources and decision-making power |
| public goods | needed goods and services that private firms cannot create at a profit |
| state capitalism | a form of capitalism in which the vast majority of the factors of production are owned by private citizens but the government intervenes widely in economic decisions to ensure that egalitarian goals are carried out |
| welfare state | a nation under extreme state capitalism in which high taxes are used to provide wide social programs |
| social democracy | a transitional economic system bridging the gap between capitalism and socialism with the predominant characteristic of the state's taking possession of those industries that are the cornerstones of the economy |
| nationalization | the government's acquisition of the ownership of major industries |
| privatization | the government's selling of nationalized business back to private owners |
| centralized socialism | a form of socialism in which the government is both the central owner and the decision maker in all economic affairs of the state |
| Communist Manifesto | written by Karl Marx and Friedrich Engels in 1848, is a foundational political pamphlet that outlines the theory of class struggle and predicts the eventual overthrow of capitalism by the working class. It argues that history is driven by conflict between |
| communism | in the economic sense, the most extreme form of socialism, in which all individuals voluntarily contribute their labor for the good of the society while taking from the economy only the goods and services they truly need |
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