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Economics CH.2

Terms in this set (16)

Economy or Economic System
An organized way of providing for the wants and needs of their people
Traditional Economy
The allocation of scarce resources, and nearly all other economic activity
Command Economy
An economy in which a central authority makes most of the WHAT, HOW, and FOR WHOM decisions
Market Economy
People and firms act in their own best interests to answer the WHAT, HOW, and FOR WHOM
Social Security
A federal program of disability and retirement benefits that covers most working people
Inflation
A rise in the general level of prices
Fixed Income
An income that does not increase even though prices go up
Capitalism
Where private citizens, many of whom are entrepreneurs, own the factors of production
Free Enterprise
Another term used to describe the American Economy
Voluntary Exchange
The act of buyers and sellers freely and willingly engaging in market transactions
Private Property Rights
The privilege that entitles people to own and control their possessions as they wish
Profit
The extent to which persons or organizations are better off at the end of a period than they were at the beginning
Profit Motive
The driving force that encourages people and organizations to improve their material well-being
Competition
The struggle among sellers to attract consumers while lowering costs
Consumer Sovereignty
Describes the role of the consumer as sovereign, or ruler, of the market
Mixed Economy or Modified Private Enterprise Economy
Its when people carry on their economic affairs freely, but are subject yo some government intervention and regulation
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