Market Economy
What is a market economy?
Producers are free to decide what to produce and consumers are free to buy whatever they need or want
What is another name for a command economy
A planned economy
What is money?
Medium of exchange that is generally accepted as payment for goods, services, and debt repayment
What does competition do to prices?
Bring them down
What is an Economy?
The way goods and services are produced and consumed
What is another name for a market economy?
Capitalist economy
How are prices set in command economy?
The government sets them
What is Demand?
The consumer's desire, willingness, and ability to purchase a good or service at a specific price within a given timeframe
What is a Federal Interest Rate?
The interest rate banks charge each other to borrow money overnight
Who is involved in the Economy?
Everyone
What does the term “Market” refer to?
The entire activity of buying and selling that takes place out in the world
What does the government own in a command economy?
The equipment for production
What are you considered if you pay someone to do something for you?
Consumer
What is Currency?
A standardized system of money including coins, banknotes, and digital balances in circulation as a medium of exchange for goods and services, typically issued and regulated by a government
What is Profit?
To earn more than you spend
What are producers free to do in a market economy?
Free to produce what they want
What is a command economy?
The government decides what to produce and how much of it to produce and how much the goods and services will cost
What is a Tariff?
A tax imposed by a government on imported goods and services, acting as a trade barrier to increase costs for foreign products
If there are fewer products available, what happens to prices?
Prices go up
What is an incentive?
To produce the thing that motivates you
Why is innovation important to market competition?
Producers wants you to spend money on their products and not others
What is one advantage of command economy?
The government can quickly direct resources during emergencies or national crisis
What is competition -as it relates to the economy?
Producers battling over who can make the most profit
What is an opportunity cost?
The benefit you give up by choosing to do one thing instead of the other
What is Recession
A significant, widespread, and sustained decline in economic activity, typically lasting more than a few months