Am Htg Midterm Ch 4

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  1. mercantilism
    an economic theory that emphasized the importance of stockpiling gold and silver to the economic power of a nation, mercantilists regulated the economy by encouraging exports and restricting imports
  2. Navigation Acts
    regulations passed by Parliament to enforce trade regulations in all colonies: all trade had to go through British or colonial merchants and be shipped in British or colonial ships with the end goal to generate large exports from England with few imports
  3. capitalism
    the philosophy of a free market economy in which the government serves only to create and acceptable environment in which to make exchanges
  4. market economy
    an economic model advanced by Adam Smith in which the forces of individual self-interest regulate the economy, eliminates the need for most government interventions
  5. exchange
    trade between two parties
  6. role of money
    money facilitates exchange by eliminating the necessity for a "coincidence of wants" functioning as a generally acceptable medium for exchange
  7. coincidence of wants
    when two parties each possess something desired by the other, promoting an exchange
  8. specialization
    the economic practice of focusing resources on production of one or a few goods
  9. perfect competition
    when buyers and sellers have no influence of price and terms of exchange
  10. role of prices and profits
    prices determine the quantity of goods supplied, as profits increase, the number of suppliers and resources for making the good will increase
  11. shortage
    when the amount demanded is greater than the amount supplied
  12. surplus
    when the amount supplied is greater than the amount demanded
  13. law of supply
    as the price of particular good or service rises, suppliers will produce more of that good or service
  14. law of demand
    as the price of a particular good or service rises, individuals will buy less of that good or service
  15. equilibrium price
    the price at which the amount demanded is equal to the amount supplied
  16. the invisible hand
    Adam Smith's term for the natural self-regulation of a market economy driven by self-interest and efficiency
  17. Laissez-faire
    policy in which there is little or no interference with exchange, trade, or market prices by the government
  18. Adam Smith
    Scottish philosopher and economist who wrote The Wealth of Nations, considered the father of modern economics
  19. How do the goals and methods of capitalism differ from mercantilism?
  20. How does specialization and exchange increase the standard of living?
  21. In what specific ways does competition shape our economy today? Has self-interest of personal virtue proved to be the motivation for most of our decisions today?
  22. What five things should government do to ensure that a free market economy remains effective?
  23. Compare the current economic structure of the United States with the vision described by Adam Smith's Wealth of Nations. In what ways are existing conditions similar and/or different to what Smith envisioned?
  24. In what way was the American Revolution related to economic interests?
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Am Htg Midterm Ch 4
am htg midterm ch 4 vocab, people, and questions
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