econ chapter 2

Economic system in which private citizens own and use the factors of production in order to generate profits

capitalism

Free enterprise economy where people carry on their economic affairs freely, but are subject to some government intervention and regulation

modified private enterprise economy

Rise in the general level of prices

inflation

Organized way a society provides for the wants and needs of its people

economic system

Economic system in which supply, demand, and the price system help people make decisions and allocate resources

market-economic

Extent of which people or organizations are better off at the end of the period than they were at the beginning

profit

Income that does not increase even though prices go up

fixed income

Economy in which competition is allowed to flourish with a minimum of government interference

free enterprise economy

Role of consumer as a ruler of the market when determining the types of goods and services produced

consumer sovereignty

Federal program of disability and retirement benefits that covers most working people

social security

The struggle among sellers to attract consumers while lowering costs

competition

Fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish

private property rights

Act of buyers and sellers freely and willingly engaging in market transactions

voluntary exchange

Driving force that encourages people and organizations to improve their well being

profit motive

The right of government to take private property at a fair price, for public purpose

eminent domain

list the 3 types of economic systems

traditional, command, market-economic

economic system in which the allocation of resources and other economic activity is the result of ritual, habit, or custom

traditional

economic system characterized by a central authority that makes most of the major economic decisions

command

list one advantage of a traditional economy

little uncertainty

list one disadvantage of a traditional economy

discourages new ideas

list one advantages of a command economy

little uncertainty

list one disadvantage of a command economy

doesn't meet the wants of consumers

list one advantage of a market economy

can adjust to change

list one disadvantage of a market economy

doesn't provide for the basic needs of everyone in society

because societies face scarcity, decisions concerning _, __ and for ______________ to produce must be made

what, how, whom

T OR F? the US is a pure market economy

false

T OR F? a mixed economy is not an economic system

true

list what country is a traditional economy

yemen

list what country is a command economy

cuba

list what country is a market-economic economy

ireland

list our nation's 7 economic goals

economic freedom, economic efficiency, economic equity, economic security, full employment, price stability, economic growth

list 3 alternative names for the US economy

capitalism, private enterprise, free enterprise

list the characteristics of a free enterprise

economic freedom, profit motive, voluntary exchange, private property, competition

list the advantages of competition

lower prices, good quality, newer products, improved services

list the roles of the government

protector, provider & a consumer, regulator, promoter of national goals

give an example of voluntary exchange

buying bananas at kroger