Glencoe Economics – Chapter 2 Vocabulary – Flashcards
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Economic System
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Way in which a nation uses its resources to satisfy people's wants and needs.
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Traditional Economy
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System in which economic decisions are based on customs and beliefs that have been handed down from generation to generation.
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Command Economy
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System in which the government controls the factors of production and makes all decisions about their use.
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Market Economy
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System in which individuals own the factors of production to make economic decisions through free interaction while looking out for their own and their families' best interests.
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Market
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Freely chosen activity between buyers and sellers of goods and services.
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Circular Flow of Economic Activity
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Economic model that pictures income as flowing continuously between businesses and consumers.
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Mixed Economy
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System combining characteristics of more than one type of economy.
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Capitalism
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Economic system in which private individuals own the factors of production.
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Laissez-faire
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Economic system in which the government minimizes its interference with the economy.
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Free Enterprise System
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Economic system in which individuals own the factors of production and decide how to use them within legal limits; same as capitalism.
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Profit
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Money left after all the costs of production -- wages, rents, interest, and taxes -- have been paid.
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Profit Incentive
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Desire to make money that motivates people to produce and sell goods and services.`=
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Private Property
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Whatever is owned by individuals rather than by government.
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Competition
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Rivalry amount producers or sellers of similar goods and services to win more business.
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Economic Efficiency
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Wise use of available resources so that costs do not exceed benefits.
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Economic Equity
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The attempt to balance an economic policy so that everyone benefits fairly.
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Standard if Living
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The material well-being of an individual, group, or nation measured by how well their necessities and luxuries are satisfied.
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Economic Growth
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Expansion of the economy to produce more goods, jobs, and wealth.
