| A | B |
|---|
| Authoritarian | Requiring strict obedience to an authority, such as a dictator. |
| Communism | A political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government. |
| Economic system | The method used by a society to produce and distribute goods or services. |
| Factor payments | services. The income people receive for supplying factors of production such as land, labor, or capital. |
| Free enterprise | An economic system characterized by private or corporate ownership of capital goods. |
| Incentive | An expectation that encourages people to behave in a certain way. |
| Laissez faire | The doctrine that states that government generally should not intervene in the marketplace. |
| Pri vatize | To sell state-run firms to individuals. |
| Product market | The market in which households purchase the goods and services that firms produce. |
| Safety net | Government programs that protect people experiencing unfavorable economic conditions |
| Self-interest | One's own personal gain |
| Socialism | A social and political philosophy based on the belief that democratic means should e used to evenly distribute wealth throughout a society. |
| Standard of living | Level of economic prosperity. |
| Traditional economy | Economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services. |
| Mixed Economy | An economic system that cobines free market with limited government interventions |
| Money Income Payments | E.g. wages, rent, interest, salaries, profits |
| Circular Flow Model | A representation of the the flows and exchanges of physical goods/services for money |
| Three Economic Questions | What to produce, How to produce, For whom to produce |
| The Invisible Hand | Adma Smith's theory that the market will self-regulate (correct itself) |
