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| Economics | Is the study of how individuals and societies seek to satisfy needs and wants through incentives, choices, and allocation of scarce resources. |
| Economic System | Way a society produces goods and services and provides and distributes these goods and services to its citizens. Economic systems provide a way to allocate scarce resources to satisfy needs and wants. |
| Resources | Natural, human, capital, and entrepreneurial are limited-scarcity. |
| Natural Resources | Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain. |
| Human Resources | The department of a business or organization that deals with the hiring, administration, and training of personnel. |
| Capital Resources | Capital resources are goods made and used to produce other goods and services. Examples include buildings, machinery, tools and equipment. Capital resources help improve productivity. |
| Entrepreneurial Resources | Entrepreneurship is considered a factor of production because economic resources can exist in an economy and not be transformed into consumer goods. Entrepreneurs usually have an idea for creating a valuable good or service and assume the risk involved with transforming economic resources into consumer products. |
| Scarcity | Refers to limitations--limited goods or services, limited time, or limited abilities to achieve the desired ends. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants at possible. |
| The four basic economic systems | Traditional, Market (Free Enterprise), Command and Mixed. |
| Traditional Economic System | Economic systems which occur in less developed countries; allows economic decisions to be ruled by tradition; ranks religious and cultural values as more important thena economics; jobs are determined according to ancestors' jobs. |
| Market (Free Enterprise) Economic System | Is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning. |
| Command Economic System | A command economy is a system where the government, rather than the free market, determines what goods should be produced, how much should be produced and the price at which the goods are offered for sale. The command economy is a key feature of any communist society. |
| Mixed Economic System | is an economic system that features characteristics of both capitalism and socialism. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims. |
| Communism (Strong Command) | Economic system in which there is strong governmental control; all productive resources are owned and operated by the government; competition is forbidden; and citizens have little or no freedom in selecting a career or workplace; practices heavy taxation. |
| Socialism (Moderate Command) | Economic system in which therre is mediumgovernmental control; governmental control is held over key industries such as utilities and transportation; provate ownership of businesses is only allowed in non-vital industries; allows competition in smaller private sectors; citizens have the right to choose career and place of employment; practices high taxation. |
| Capitalism (Market) | Economic system which derives from the principle of individual rights; practices little governmental control; encourages private ownership of business in all sectors; supports competition in all areas; citizens have full freedom to choose career and workplace; practices moderat taxation. |
| Adam Smith | "Father of Modern Economics"; saw the market system acting as an "invisible hand" which leads people to unintentionally promote society's interests while pursuing their own. |
| Karl Marx | Intellectual father of modern day Marxist economies; predicted capitalism would be ultimately destroyed by its own inherent contradictions. |
| John Maynard Keyes | His ideas about the causes of unemployment revolutionized the macroeconomic theory and profoundly altered the government's involvement in the economy. |
| Private Enterprise | Promotes competition, meet the wants and needs of customers and encourage profits. It is also synonymous with market/capitalist economy; emphasizes the private sector; allows ownership of resources and businesses by individuals in society; permits individuals to make economic decisions rather than the government; allows individuals to receive benefits and wages from employers. |
