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14 terms

AVC 12th Chapter 2 Econ

STUDY
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economic system
Set of rules that governs what goods and services to produce, how to produce them, and for whom they are produced.
capitalism
an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.
traditional economy
economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
command economy
economic system in which the central government makes all decisions on the production and consumption of goods and services
specialization
Individual workers concentrate their labor on single tasks, enabling each worker to become more efficient and productive.
specialized capital
tools designed to increase the efficiency of a particular task in production.
division of labor
The type of arrangement in which each worker specializes in a particular task or job.
wealth
The tools or products that are accumulated in an economic system.
What?
How?
For Whom?
The Three Basic Economic Questions
profits
money earned after a a business subtracts its cost from revenue. It is the principle incentive (reason) for starting a business in capitalism.
allocation of resources
business dictionary definition: Analysis of how scarce resources ('factors of production') are distributed among producers, and how scarce goods and services are apportioned among consumers.
Compound Interest
interest calculated on both the principal and the accrued interest.
401K
A form of retirement fund that an employee to contributes directly through a deduction from their paycheck.
Roth IRA
individual retirement account in which contributions are made after taxes so that no taxes are taken out at maturity