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FCSDEcon-Ch 2
Economics Vocab PH Ch 2
| Question | Answer |
|---|---|
| economic system | the method used by a society to produce and distribute goods and services |
| factor payments | the income people receive for supplying factors of production, such as land, labor, or capital |
| safety net | government programs that protect people experiencing unfavorable economic conditions |
| standard of living | level of economic prosperity |
| traditional economy | economic system that relies on habit, custom or ritual to decide questions of production and consumption of goods and services |
| market economy | economic system in which decisions on production and consumption of goods and services are based on voluntary exchange i markets |
| centrally planned economy | economic system in which the central government makes all decisions on the production and consumption of goods and services |
| mixed economy | economic system that combines tradition and the free market with limited government involvement |
| market | an arrangement that allows buyers and sellers to exchange things |
| specialization | the concentration of the productive efforts of individuals and firms on a limited number of activities |
| household | a person or group of people living in the same residence |
| firm | an organization that uses resources to produce a product, which it then sells |
| factor market | market in which firms purchase the factors of production from households |
| profit | the financial gain made in a transaction |
| product market | the market in which households purchase the goods and services that firms produce |
| self-interest | one's own personal gain |
| incentive | an expectation that encourages people to behave in a certain way |
| competition | the struggle among producers for the dollars of consumers |
| invisible hand | term economists use to describe the self-regulating nature of the marketplace |
| consumer sovereignty | the power of consumers to decide what gets produced |
| socialism | a social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society |
| communism | a political system characterized by a centrally planned economy with all economic and political power resting in the hands of a central government |
| authoritarian | requiring strict obedience to an authority, such as a dictator |
| collective | large farm leased from the state to groups of peasant farmers |
| heavy industry | industry that requires a large capital investment and thatproduces items used by other industries |
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