Economic Systems
Economic system in which government makes all decision on production and consumption.
What is a command or centrally planned economy?
The driving force of economics; a limited amount of resources available to meet the needs and wants of a people.
What is scarcity?
His theory in The Wealth of Nations describes the Invisible Hand - the self-regulating force in the market that relies on competition and incentives.
Who was Adam Smith?
A phrase that describes trade-offs nations face when deciding what to produce between military or consumer goods.
What is 'guns or butter'?
The financial gain made in a transaction.
What is profit?
Economic system that relies on habit, custom or ritual to decide questions of production and consumption.
What is a traditional economy?
Land, labor and this are the three factors of production.
What is capital?
The doctrine that states that government generally should not intervene in the marketplace.
What is laissez-faire?
Social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth.
What is socialism?
A period of macroeconomic expansion followed by a period of contraction.
What is a business cycle?
Economic system in which decision of production and consumption are based on voluntary exchange.
What is a market economy?
All the alternatives that we sacrifice when we make a decision.
What are trade-offs?
The privilege or right to control ones own possessions as they wish.
What is private property rights?
A form of government characterized by strict control held by the central government, as in the Soviet Union.
Income that people receive for supplying factors of production.
What are factor payments?
Study of the behavior and decision making of entire economies.
What is macroeconomics?
The number-one, most desirable alternative given up as a result of a decision.
What is the opportunity cost?
This is the force that encourages people and organizations to improve their material well-being.
What is profit motive?
Social Security and other government supports are examples of this.
What are safety nets?
An expectation that encourages people to behave in a certain way.
What is an incentive?
Study of economic behavior and decision making of small units.
What is microeconomics?
A person who makes decisions about how best to use the factors of production.
What is an entrepreneur?
A private organization that tries to persuade public officials to act or vote according to the wishes of group members.
What is an interest group?
When an economy goes from a centrally planned economy toward a market-based economy, there is a period of this.
What is a transition?
The shift of factors of production from making one good or service to another causing an increase to produce the second item.
What is the law of increasing costs?