| A | B |
|---|
| economic system | An organized way of providing for the wants and needs of a society |
| traditional economy | Economic System in which basic economic activity stems from ritual, habit, or custom |
| command economy | Economic System in which basic economic decisions are made by a central authority |
| market economy | Economic system in which basic economic decisions are made by people and firms acting in their own best intersts |
| market economy advantage | Relatively small degree of goverment interference |
| Weaknesses of a command economy | Requires a large decision making bureaucracy, provides few incentives, for people to work hard, lacks the flexibility to deal with minor problems |
| Examples of traditional economies | Africa, Mbuti, and Australian Aborgines |
| Economic Efficiency | An economic goal that is based on the desire of people to use resources wisely |
| Price Stability | An economic goal that is based on preventing inflation |
| Social Security | A federal program of disability and retirement benefits |
| Fixed Income | An income that does not increase even though prices go up |
| Economic Freedom | An economic goal that is based on the desire of people to make their own decisions |
| Economic Goals are important because | Help people determine if an economic system meets their needs |
| Example of Economic Growth | When a pencil plant opens and 150 jobs are created |
| Capitalism | Economic system in which private citizens own the factors of production |
| 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 |
| Voluntary exchange | A characteristic of capitalism in which buyers and sellers freely and willingly engage in market transactions |
| Mixed Economy | Economy in which free economic activity is subject to some government intervention and regulation |
| Characteristics of Capitalism | private property rights, economic freedom, and profit motive |
| Why are entrepreneurs important in a free enterprise economy | They start new businesses |
| How do consumers exercise their power in the American economy | By deciding what to purchase |
| Who is the protector, consumer, regulator, and promoter of economic goals in the United States | Government |
| Private Property Rights | privilege that entitles people to won their possessions |
| Example of a market economy | United States |
| The United States can best be described as having a | modified private enterprise system |
| Adam Smith says that what directs the choices business people make about how to use their resources | Profit |
| socialism | economic system in which government owns some factors of production and has a role in determining what and how goods are produced |
| communism | economic and political system in which factors of production are collectively owned and directed by the state: theoretically classless society in which everyone works for the common good. |
