Econ Chapter 2: Economic Systems

Front 1

economic system

Back 1

the way society uses its scarce resources to satisfy its people's unlimited wants

Front 2

traditional economy

Back 2

decesions are made based on customs and beliefs handed down from generation to generation
goal=survival, everyone has a position/task
no chance in deviation from this pattern ex. african tribal village

Front 3

command economy

Back 3

gov decides what goods and services will be produced, how they will be produced and how they will be distributed
ex. North Korea, Cuba

Front 4

market economy

Back 4

based on individual choice not gov directions. consumers/producers drive the economy ex. united states

Front 5

centrally planned economy

Back 5

system in which society's leaders make all economic decisions (command economy)

Front 6

socialism

Back 6

economic system in which government owns some or all of the factors of production

Front 7

communism

Back 7

extreme socialism in which there is NO private ownership of property and little or no political freedom

Front 8

authoritarian

Back 8

requires absolute obedience to authority

Front 9

democratic socialism

Back 9

established through democratic political process and the gov owns certain basic industries but others are privately owned

Front 10

private property rights

Back 10

rights of individuals/groups to own property

Front 11

market

Back 11

any place where people buy and sell resources, goods and services

Front 12

laissez faire

Back 12

principle that gov should not interfere in the economy

Front 13

capitalism

Back 13

based on private ownership of the factors of production
operates on the belief that producers will create the goods/services that consumers demand on their own

Front 14

voluntary exchange

Back 14

trade in which both parties anticipate that benefits will outway the cost

Front 15

consumer sovereignty

Back 15

ideas that consumers have ultimate control because they can purchase what they want and refuse what they don't want

Front 16

specialization

Back 16

people concentrate their efforts in the areas in which they have an advantage

Front 17

circular flow model

Back 17

visualizes how all interactions occur in a market economy

Front 18

product market

Back 18

market for the goods + services (whether individuals purchase goods/services)

Front 19

factor markets

Back 19

markets for the factors of production - land, labor, capital + entrepreneurship

Front 20

mixed economy

Back 20

economic system with element of traditional, market and command economies (most common type)

Front 21

nationalize

Back 21

change from private ownership to gov or public ownership

Front 22

privatize

Back 22

change from gov or public ownership to private ownership

Front 23

global economy

Back 23

economic interaction across international boundaries