Economics Chapter 2 Section 1 Review – Flashcards

Is based on society's values- its customs and values

An economy in which a central government authority makes all basic economic decisions and controls the factors of production

an economy in which the government has little say in what, how, and for whom goods are produced and in which the factors of production are owned by individuals

Free exchange of goods and services

The impulse that encourages people to fulfill their needs and wants

Something that encourages you to behave in a particular way

Combines elements of traditional, market, and command economic models to answer the three basic economic questions

An economic system in which the government owns or controls nearly all factors of production; also known as communism

Same as authoritarian system

Individuals own the factors of production and answer the basic economic questions

Economy in which the government owns some of the factors of production

What to produce, How to produce, and For Whom to produce. The traditional economy answers key questions by using cultural norms. What are the traditions of our society. The Command economy uses central planning and production directives from the government (communism) the market system of capitalism has many freedoms and lets the conditions of supply and demand determine major decisions.

We no longer produce what we need to sustain ourselves, we import much more than we export, and we are selling off our assets and taking on massive debts to sustain a standard of living we can no longer afford.