Economics Chapter 2 Test Answers – Flashcards
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economic system
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way in which a nation uses its resources to satisfy its people's needs and wants
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mixed economy
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system of combining characteristics of more than one type of economy
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market
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the process of freely exchanging good ans services between buyers and sellers
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circular flow of income and output
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economic model that pictures income as flowing continuously between businesses and consumers
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capitalism
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economics 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 incentive
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desire to make money that motivates people to produce and sell goods and services
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competition
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rivalry among producers or sellers of similar goods and services to win more businesses
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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 of 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 economy to produce more goods, jobs and wealth
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regulate
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in a mixed economy, the government might______some areas of business by making laws to control or influence that part of the economy
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available
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all societies make decisions about how to use_______resources
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continual
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a market economy experiences______ change as market forces influence the factors of production
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initiative
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an entrepreneur is someone who sees a need and takes the_______by starting a new business
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incentive
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competition is usually the_______, or motivation, for businesses to lower prices
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expand
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if a business is doing well, it might_____or grow larger
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element
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competition is an important_______of capitalism
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distribute
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every business must decide how best to _______ its goods or services to consumers
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what should be produced?
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what basic economic question depends on a nation's available natural resources?
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how should it be produced?
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what economic question is being answered if an industry replaces some workers with machines?
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economic decisions are based on customs beliefs and often religion
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how does traditional economy answer the basic question, "how should it be produced?
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...
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what are six important characteristics of free enterprise
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they limit the role of government mainly to national defense and keeping the peace
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what is government's role in the modern american version of capitalism?
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it allows each member of society make choices
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why is private property important in the american economic system?
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...
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what are the six goals of free enterprise?
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they are responsible fore electing government individuals and they have responsibility to use their education in a way that helps the system
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what are two examples of individuals' economic responsibilities in a free-enterprise system?
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socialists
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who did karl marx believe should control the means of production in an economy
