| A | B |
|---|
| Economic Systems | Is the method used by a society to produce and distribute goods and services |
| Factor Payments | Are the income people receive for supplying factors of production |
| Patriotism | Is the love of one's country |
| Safety Net | Set of government programs that protect people experiencing unfavorable economic conditions |
| Standard of Living | Level of economic prosperity |
| Traditional Economy | Relies on habit, custom, or ritual to decide what to produce, how to produce it, and to whom to distribute it |
| Market Economy | Economic decisions are made by individuals and are based on exchange, or trade |
| Centrally Planned Economy | The central government alone decides how to answer all three key economic questions |
| Command Economies | Are sometimes called Centrally Planned Economies |
| Mixed Economies | Market based economic systems in which government plays a limited role |
| Market | Is an arrangement that allows buyers and sellers to exchange things |
| Specialization | Is the concentration of the productive efforts of individuals and firms on a limited number of activities |
| Household | Is a person or group of people living in the same residence |
| Firm | Is an organization that uses resources to produce a product, which it then sells |
| Factor Market | Area of exchange where firms purchase factors of production from households |
| Profit | Is the financial gain made in a transaction |
| Product Market | Goods and services that firms produce are purchased by households |
| Incentives | Is the hope of reward or the fear of punishment that encourages a person to behave in a certain way |
| Competition | Economist call this struggle among producers for the dollar of consumers |
| Invisible Hand | Self Interest and competition work together to regulate the marketplace |
| Consumer Sovereignty | Producers have incentives to meet consumer's desires, and consumers decide what gets produced |
| Wealth of Nations | Book that scottish philosopher Adam Smith wrote |
| Laissez Faire | Means "let them do as they please" |
| Invisible Hand and Self-Interest | Guides a nation's resources to their most productive use |
| Socialism | Is a social and political philosopy based on the belief that democratic means should be used to distribute wealth evenly throughout a society |
| Communism | Is characterized by a centrally planned economy with all economic and political power resting in the hands of the central government |
| Authoritarian (governments) | Exact strict obedience from their citizens and do not allow individuals freedom of judgment and action |
| Collectives | Were large farms leased from the state to groups of peasant farmers |
| Heavy Industry | Require a large capital investment to produce items used in other industries |
| Adam Smith | One of the first persons to offer an explanation of how a market economy works |
