Chapter 2: Economic Systems

This is where buyers and sellers enter into voluntary exchange.  Can be anywhere.  

The idea that buyers have all the power to decide what is produced by their purchases.

The financial gain made in a transaction, money left over after all costs are paid. 

True or False:  The Soviet Union is still a viable economy/country and model of economic power.

System with no government intervention, people own factors & make their own choices in markets.

Hope of reward or fear of punishment that encourages people to act in a certain way.  

Looking out for number one, doing things that benefit you individually.

The income people get for supplying the factors of production, such as land,labor or capital.

Which is NOT an advantage of the free market?

Maximizing resources so that there are resources available in the future.

True or False:  Cuba & North Korea have a command economy and a communist government.

Communist governments have used this power to control their citizens through strict obedience.

Social/political belief that democratic means are used to distribute wealth equally in society.

Innovation and efficiency which leads to a bigger economy & higher living standards for people.

The ability of people to make their own choices.

Market economies

Centrally planned economy, planners own factors of production & make all economic decisions. 

True or False:  The Soviet Union was a great economic and political success.

Laissez-faire states that 

Political system with centrally planned economy, all power is held by the government.

True or False: China has a pure market economy.

Most countries in the world today have this type of economy:

Economic system that relies on customs & rituals to answer basic questions.  

The ability to check prices at several stores is an example of activity in a ____ economy

Who was the philosopher who first described how the market works?

This value is the love of country, that inspires people to serve. 

Market based economy plus government intervention allows for choice in markets and equity. 

True or False:  The United States of America has a mixed economy.  

True or False:  Private property is property that is owned by people/companies not government 

Which two forces make up the invisible hand of the market? (KNOW THIS FOR YOUR TEST!)

Rivalry among businesses to get more customers and higher profits.  

This is the method used by a society to produce and distribute goods and services.

The concentration of productive efforts of individuals/firms on few activities, a specialty,

Fair & equitable distribution of wealth or factors of production.

Government programs that protect people experiencing unfavorable economic conditions.