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Economics Vocab - Chapter 2

Terms in this set (16)

economy/economic system
An organized way of providing for the wants and needs of people
command economy
economic system characterized by a central authority that makes most of the major economic decisions
traditional economy
economic system in which the allocation of scarce resources and other economic activity is the result of ritual, habit, or custom
market economy
economic system in which supply, demand, and the price system help people make decisions and allocate resources
Social Security
federal program of disability and retirement benefits that covers most working people
inflation
rise in the general level of prices
fixed income
income that does not increase even though prices go up
capitalism
economic system in which private citizens own and use the factors of production in order to generate profits
free enterprise
market economy in which competition is allowed to flourish with minimum of government interference
voluntary exchange
act of buyers and sellers freely and willingly engaging in market transactions
private property rights
fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish
profit
extent to which persons or organizations are better off at the end of a period than they were at the beginning; usually measured in dollars
profit motive
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
role of consumer as ruler of the market
mixed economy/modified private enterprise economy
free enterprise market economy where people carry on their economic affairs freely, but are subject to some government intervention and regulation
THIS SET IS OFTEN IN FOLDERS WITH...