Economics Chapter 2 Vocab Answers – Flashcards
Unlock all answers in this set
Unlock answersquestion
What should be produced? How should it be produced? For whom should it be produced?
answer
Three basic economic questions
question
Economic growth, economic freedom, equity, efficiency, economic security
answer
Five basic economic goals
question
Traditional, Command, Market, Mixed
answer
Four types of economic systems
question
Equity
answer
the quality of being fair and just
question
Economic security
answer
confidence in their ability to support themselves and their families
question
Social safety net
answer
any form of government assistance for those with financial needs
question
Economic freedom
answer
gives people the ability to make economic decisions for themselves
question
Sustainability
answer
the ability to continue actions indefinitely; the ability of resources to last forever
question
Incentive
answer
the prospect of a reward or punishment that influences a decision or motivates greater effort
question
Traditional economy
answer
decisions about resources are made by habit, custom, superstition, or religious tradition
question
Advantages of traditional economy
answer
economic security; stable and equity
question
Disadvantages of traditional economy
answer
rarely achieve the goals of economic freedom, economic growth, and a high standard of living
question
Command economy
answer
central planners make the important decisions about what, how, and for whom to produce
question
Communism
answer
economic system under which all resources and businesses are publicly owned and economic decisions are made by central authorities
question
Socialism
answer
an economic system under which most resources and businesses are publicly owned and economic decisions are made by groups of workers and consumers
question
Advantages of command economy
answer
provide economic security, no safety nets, and flexibility-government can change what they want
question
Disadvantages of command economy
answer
no equity-reality is that communism did not exist, low standard of living, and rationing/black markets
question
Incentive for traditional economy
answer
social approval
question
Incentive for command economy
answer
incentive comes from the government
question
Karl Marx
answer
he Communist Manifesto; all about revolution; looked at economic systems through a historic lens; proletariat (have nots) vs bourgeoisie (haves); no countries are/were 100% communist
question
Market economy
answer
most key economic decisions are made by business owners and consumers
question
free-enterprise system
answer
an economic system based on private (individual or business) ownership of resources and voluntary exchange
question
Incentive for market economy
answer
incentive is need to please consumers for profit
question
Advantages of market economy
answer
efficiency, sustainability, economic growth, high standard of living, economic freedom
question
Disadvantages of market economy
answer
equity, especially when viewed as equality of outcome rather than equality of opportunity; security (unemployment), resource conservation, morally questionable practices (selling goods or drugs not properly tested)
question
mixed economy
answer
combines a market economy with significant government involvement and elements of tradition
question
Advantages of mixed economy
answer
state provides essential services, low competition, high choices
question
Disadvantages of mixed economy
answer
heavy taxes, high government control can add costs and discourage new business enterprises
question
The role of a government
answer
establishes and enforces rules that improve market performance; provides important goods and services that private individuals tend not to purchase; helps improve economic security, equity, and sustainability
