Contemporary Economics – Chapter 2.1 – Flashcards

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question
what, how, for whom
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the three question that all economies must answer
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economic system
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the set of mechanisms and institutions that resolves the what, how, and for whom questions for an economy
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pure market economy
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an economic system with no government involvement so that private firms account for all production
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pure centrally planned economy
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an economic system in which all resources are government-owned and production is coordinated by the central plans of government
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mixed economy
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an economic system that mixes central planning with competitive markets
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market economy
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describes the U.S. economic system, where markets play a relatively large role
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transitional economy
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an economic system in the process of shifting from central planning to competitive markets
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traditional economy
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an economic system shaped largely by custom or religion
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