| A | B |
|---|
| economic system | the method used by a society to produce and distribute goods and services. |
| factor payments | the income people receive for supplying factors of production, such as land,labor and capital. |
| patriotism | the love of one's country; the passion that inspires a person to serve his or |
| safety net | government programs that protect people experiencing unfavorable economic conditions |
| 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. |
| market economy | economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets. |
| centrally planned economy | economic system in which the central government makes all decisions on the production and consumption of goods and services. |
| command system | economic system in which a central authority is in command of the economy; a centrally planned economy. |
| mixed economy | economic system that combines tradition and the free market with limited government involvement. |
| economic efficiency | making the most of resources |
| economic freedom | freedom from government intervention in the production and distribution of goods and services. |
| economic security & predictability | assurance that goods and services will be available, payments will be made on time, and a safety net will protect individuals in times of economic disaster. |
| economic equity | fair distribution of wealth. |
| economic growth & innovation | Innovation leads to economic growth, and economic growth leads to a higher standard of living. |
| other goals | societies pursue additional goals, such as environmental protection. |
| specialization | the concentration of the productive efforts of individuals and firms on a limited number of activities. |
| household | a person or gorup of people living in the same house. |
| firm | an organization that uses resources to produce a product which it then sells. |
| factor market | market in which firms purchase the factors of production from households |
| profit | the financial gain made in a transaction |
| product market | the market in which households purchase the goods and services that firms produce |
| self-interest | one's own personal gain |
| incentive | an expectation that encourages people to behave in a certain way. |
| competition | the struggle among producers for the dollars of consumers. |
| invisible hand | term economists use to describe the self-regulating nature of the marketplace. |
| consumer sovereignty | the power of consumers to decide what gets produced. |
| socialism | a social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society. |
| communism | a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government. |
| authoritarian | requiring strict obedience to an authority, such as a dictator. |
| collective | large farm leased from the state to groups of peasant farmers. |
| heavy industry | industry that requires a large capital investment and that produces items used in other industrie |
| capitalism | Another name for market or free enterprise economic system where consumers answer the 3 economic questions |
| three economic questions | what goods & services will be produced; How will they be produced; who consumes them once they are produced? |
