Economic Basics
These three decisions must be made by every society: what to produce, how to produce, and _______.
For whom to produce
In a free market system, the government helps protect these rights so people can own things.
Property Rights
This economy follows ancestral customs and traditions to guide production.
Traditional Economy
These two forces work together to set prices in a free market.
Supply and Demand
Investing in new machines or digital tools helps increase this economic goal.
Efficiency
The concept that we have limited resources but unlimited wants.
Scarcity
One reason governments step into markets is to fix this problem when markets don’t function well.
Market Failure
In this economy, central authorities make most decisions about production and distribution.
Command Economy
This metaphor describes how individuals acting in their self-interest can benefit the whole economy.
The invisible hand
Governments improve this by funding schools, job training, and skills development.
Human Capital
The act of giving up one thing to gain something else.
Trade off
Payments like unemployment checks or disability benefits are examples of these.
Transfer Payments
In this economy, decisions are driven by individual choices in markets.
Market Economy
The wage paid to workers is this type of flow in the circular model.
Factor Payment
Supporting small businesses and new inventions promotes this kind of economic growth.
Entrepreneurship
The value of what you gave up when you made a decision.
Opportunity Costs
Agencies like the FDA exist to ensure this about goods and services.
Product Safety
Most countries operate under this blended system.
Mixed Economy
This type of market is where you buy your groceries or new clothes.
Product Market
What is it called when governments work toward stability is by reducing this when it gets too high.
Inflation/National Debt
This diagram shows how households and businesses exchange money and resources.
Circular Flow Model
Governments enforce these legal agreements to ensure business is conducted fairly.
Contracts
This type of economy mixes private ownership with government oversight.
Mixed-market Economy
A trade that does not involve money but relies on goods or services in exchange
Barter
Switching to clean energy or increasing tourism are strategies to do this in struggling economies.
Diversifying the Economy