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Chapter two quiz
Terms in this set (20)
What are three types of economic systems?
Traditional, command and market
What is a Traditional economy?
The use of scares resources based on handed-down ways of living.
What are positive and negatives of a traditional economy?
Positive: Everyone knows what and how and for whom to produce goods
Negative: Both new ideas and ways of doing things are not encouraged resulting in a stagnant economy and low standard of living
What is a command economy?
A central authority (government) makes all major economic decisions, property rights are restricted and individuals have little freedom
What are positive and negatives of a command economy?
Positive: Can change the direction of economic production in major ways
Negative: It ignores the wants and needs of consumers, encourages people to fill a quota rather than make a quality product, bureaucracy is large slow and costly, is not flexible to address changing needs, does not reward individuals for initiative
What is a market economy?
A economy ware consumers a businesses have freedom to make economic decisions in their best interests without government interference
What is a market economy also called?
What are advantages and disadvantages of a market economy?
Advantages: individual freedom, gradual adjustments to change over time, less government interference, decentralized decision making, production of a variety of goods, greater customer satisfaction
Disadvantages: inadequate provision of some basic goods, high degree of uncertainty due to competition
In what economy are people given the most choices?
What is a mixed economy?
A mix of two economic systems
What is communism?
A more strict form of socialism in which the factor of production are owned collectively and controlled by the state
What is socialism?
A mixed economic system in which the government owns some of the factories of production and also provides some of it's people's basic needs
What are the economic and social goals of the United Sates?
Economic: freedom, efficiency, equity, security, growth, full employment and price stability
What is inflation?
A general rise in prices
How are economic conflicting goals resolved?
By comparing the cost of a economics goal to its benefits
What is a free enterprise system?
Individuals are free to own resources and use them as they wish, there is ample competition because of minimal government interference
What are five characteristics of the free enterprise/capitalist system?
Economic freedom, Voluntary exchange, private property rights and profit motive
What is the driving force behind the free enterprise system?
What is consumer sovereignty?
Consumers make purchases, to tell producers of goods and services what and how much to produce
What is the governments role in the economy?
Protecter, provider, regulator and consumer
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