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39 Cards in this Set

  • Front
  • Back
What are the three basic economics questions (3EQ)?
What to produce, How to produce, and for whom to produce.
Decribe a traditional economy.
A traditional economy is based on the society's values, its customs and traditions. Rituals and beliefs are formed fram their past, including jobs and food.
Officials are sometimes called...
Central planners
Explain a command economy.
A command economy relies on the government officials to answer the three basic economic questions. Can also be called planned economies. Individuals have little or no say in eco. choices.
What are vassals?
Supporters to the emperor in China who pledged their military and political loyalty in exchange for land grants.
What was the granted resources, such as land called in the Middle Ages? Who had control over the decisions and money?
Fiefs. The lord/monarch had control over the natural, human,and capital resources along with the eco. questions.
Explain a market economy?
Individuals in a market economy answer the 3EQ. People can buy, sell, and produce anything they want.
What is the free exchange of goods and services called? Explain it.
The market provides the only form of control over the 3EQ. Examples are the US, Germany, and Japan.
Who explained the process of market regulation? What did he say?
Adam Smith (1723-1790) from scotland published "AN Inquiry into the Nature and Causes of Wealth of Nations." He said when the market is not controlled by the gov. it is driven by self interest. He said this helps the economy grow, each person tries to gain the greatest personal advantage.
What is self interest?
The impulse that encourages people to fulfill their needsd and wants.
What is an incentive?
Something that encourages you to behave in a particular way.
Describe a mixed economy.
A mixed economy combines elements of traditional, market, and command economies. There are three categories: authoritative socialism, capitalism, and democratic socialism.
Describe Authoritarian Socialism.
Communism, closest to the pure command economy, is controlled almost every factor of production.
Describe capitalism.
THese are the economies closest to the market economy, individuals determine the 3EQ. Career selection determines what you produce. The gov. regulates certain items, and has health regulation and provides security.
Describe Democratic Socialism.
The government owns some factors of production, such as electrical units, telephone networks, things of national concern. The election of officials gives the individual control over some of these aspects.
The US has a...
Capitalist economy and is more of a market model, driven by the individuals.
Explain free enterprise.
A system under which business can be conducted freely with little government intervention.
In the US, individuals have the right to...
own private property and enter into contracts, make individual choices, engage in economic competition, make decisions based on self interest, and participate in the economy with limited government involvement or regulation.
What sets the US apart form a pure market model?
Limited government intervention or regulation.
Describe private property.
goods owned by individuals and businesses, rather than the government. EX: clothes, CDs, factories, equipment.
What is a contract?
the right to enter into agreements with another individual to buy/sell goods and services. It is a legal binding.
What is competition?
The economic rivalry that exists among businesses selling the same/similar products.
What is a voluntary exchange?
The transaction the is produced when producers and consumers uncionditionally purchase and sell products, and they believe that the opportunity costs of such trade are acceptable to both parties.
Describe free enterprise.
Free enterprise is driven by the decisions of producers and consumers, with a limited amount of government involvement.
In a free enterprise system, what do producers do?
Provide goods and services, work to satisfy the needs and wants of consumers with a variety of goods. When successful, a producer may choose to spend money on product development to provide new products.
In a free enterprise system, what do consumers do?
Consumers influence production by purchasing goods and services. They communicate with producers through their economic choices.
In a free enterprise system, what does the government do?
The government oversees and regulates the effects of these decisions on the economy as a whole.
Explain the Product market.
In a circular flow model, Green arrows are for the product market, which represents all of the exchanges of goods and services in the economy.
Explain the resource market.
In a circular flow model, Gold arrows are for the resource market, which represent the exchange between households (individuals who own factors of production) and business firms and the government (users of the resource).
What is income?
The money paid to households by business firms and the government in exchange for the households' resources. EX: rents(in exchange for natural resources)wages (for labor), and interest (for capital).
Nations are also called...
Economic systems.
What are the six economic goals set by the US?
Economic: freedom, efficeincy, equity, security, stability, and growth.
The goal of economic efficiency has to do with the efforts to make the best use of _________ resources.
Economic equity is also called...
"economic justice"
What is full employment?
It is the lowest possible level of unemployment in the economy. Part of Economic Stability.
What is price stability?
It is achieved when the overall price of the goods and services in the economy is relatively constant. Part of Economic Stability.
What is a nation's standard of living?
It refers to people's economic well-being. It is measured by how much the average person in that nation is able to consume in a given period of time. Part of Economic Growth.
What are the three things priorities can do?
They must be assigned, they can change, they can conflict (and their solutions can conflict).
What are you going to get on your Economics Quiz?