| A | B |
|---|
| traditional economy | production is based on customs and tradition |
| standard of living | people's economic well being as determined by the quantity of goods and services they consume in a given time period |
| market economy | the government has little say in what, how, and for whom goods are produced and in which the factors of production are owned by individuals |
| market | the free exchange of goods and services |
| self-interest | the impulse that encourages people to fulfill their needs and wants |
| incentive | something that encourages an action or effor |
| mixed economy | combines elements of the traditional, market, and command economic models |
| authoritarian socialism | governemnt owns or controls nearly all factors of production; (communism) |
| communism | the government owns or controls nearly all factors of production (authoritarian socialism) |
| capitalism | a market-based economic system in which individuals own and control the factors of production |
| democratic socialism | some means of producing and distributing goods are owned or controlled by an elected government |
| free enterprise | private business operates with minimal government involvement |
| contracts | a legally binding agreement to buy and sell goods and services |
| competition | state of rivalry among sellers of the same or similar products, in which each seller tries to gain a larger share of a market and to increase profits |
| product market | the market in which producers offer - and consumers purchase - final goods and services |
| resource market | the market in which households exchange resources with businesses and the government |
| income | money payments that households receive from business firms and the government in exchange for resources |
| full employment | the lowest possible level of unemployment in an economy |
| price stability | the condition that exists when overall price levels remain relatively constant over a period of time |
| command economy | a central government authority makes all basic economic decisions and controls the factors of production |
