Econ Ch 2

  1. Basic Economic Decisions
    The choices that must be made in any society regarding what to produce, how to produce, and to whom production is distributed.
  2. Economic System
    The way in which an economy is organized to make the basic economic decisions.
  3. Traditional, or Agrarian, Economy
    An economy that relies largely on tradition, custom, or ritual when making the basic economic decisions.
  4. Barter
    The direct exchange of goods or services for other goods or services.
  5. Market Economy
    An economy in which the basic economic decisions are made by individual buyers and sellers in markets using the language of price.
  6. Price System
    A market system; one in which buyers and sellers communicate through prices in markets.
  7. Private Property Rights
    Individual rights to possess and dispose of goods, services, and resources.
  8. Free Enterprise
    The right of a business to make its own decisions and to operate with a profit motive.
  9. Capitalism
    An economic system with free enterprise and private property rights; economic decision making occurs in a market environment.
  10. Circular Flow Model
    A diagram showing the real and money flows between households and businesses in output, or product, markets and input, or resource, markets.
  11. Output Markets (Product Markets)
    Markets in which businesses are sellers and households are buyers; consumer goods and services are exhanged.
  12. Input Markets (Resource Markets)
    Markets in which households are sellers and businesses are buyers; factors of production are bought and sold.
  13. Least Cost (Efficient) Method of Production
    The method of production that allows a good or service to be produced at the lowest cost.
  14. Market Failure
    A market system creates a problem for a society or failes to achieve a society's goals.
  15. Government Regulation
    Government commissions and boards are involved in business decision making.
  16. Planned Economy (Command Economy)
    An economy in whic the basic economic decisions are made by planners rather than by private individuals and businesses.
  17. Socialism
    An economic system in which many of the factors of production are collectively owned and an attempt is made to equalize the distribution of income.
  18. Planning Failure
    Centralized planning creates a problem for a society or fails to achieve a society's goals.
  19. Mixed Economy
    AN economic system with some combination of market and centralized decision making.
  20. Privatization
    The granting to individuals of property rights to factors of production that were once collectively owned or owned by the state.
  21. Laissez-Faire Capitalism
    Capitalism with a strong emphasis on individual decision making; little or no government interference.
  22. Mercantillism
    An economic system or philosophy that subordinates individual interests and decisions to those of the state.
  23. Industrial Revolutin
    A time period during which an economy becomes industrialized; characterized by such social and technological changes as the growth and development of factories.
  24. Muckrakers
    Authors, journalist, and others who sensationalized American social problems in the early twentieth century.
  25. New Deal
    A series of programs and legislative reforms instituted during the administration of Franklin D. Roosevelt in the Great Depression of the 1930s.
  26. Employment Act of 1946
    Legislation giving the federal government the right and responsibility to provide an environment for the achievement of full employment; full production, and stable prices.
Card Set
Econ Ch 2
ch 2