Term
Free Market Economy
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Definition
| Economy based on power of division of labor in which the prices of goods and services are determined in a free price system and set by supply and demand. |
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Term
Economic System
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Definition
the set of mechanisms and institutions that resolves the wht, how and for whom questions. Some standards used to distinguish among economic systems are:
1. Who owns the resources?
2. What decision-making process is used to allocate resources and products?
3. What types of incentives guide economic decision makers?
In some cases, religion, age, gender and race are included in decision making. Political stances and majority rule also play a role. |
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Term
| Command Economy /Users/jamesbritton/Downloads/command.jpg |
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Definition
Economic system in which all resources are government-owned and all production is directed by the central plans of the government. Ideally, command economies produce a combination of products society desires. Because of the following problems, countries have modified command economies to allow a greater role for private ownership and market competition.
1. consumers get low priority
2. little freedom of choice
3. central planning can be inefficient
4. resources owned by the Central Authority are sometimes wasted
5. environmental damage
6. no roles for entrepreneurs |
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Term
Mixed Economy
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Definition
| An economic system that mixes central planning with competitive markets. The U.S is a mixed economy. Mixed economies reflect both market and planned economies. |
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Term
| Traditional Economy /Users/jamesbritton/Downloads/tradition.jpg |
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Definition
| An economic system shaped largely by custom or religion. In India, caste systems restrict occupational choice. Under Islamic law, charging interest is illegal. In some cases, very little trust exists between businesses that only family members are hired which restricts business growth. |
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Term
| Transitional/Developing Economy /Users/jamesbritton/Downloads/transition.jpg |
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Definition
An economic system in the process of shifting from central planning to competitive markets. This transition involves converting goverment enterprises and into private ones. This process is also called privatization.
-Moscow
-Beijing
-Hungary
-Mongolia |
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Term
Adam Smith
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Definition
According to Smith, market forces coordinate production as if by an "invisible hand." He argued that "although each individual pursues his or her self-interests, the invisible hand of market competition promotes general welfare."
-voluntary choices
-Theory of Moral Sentiments
-magnum opus |
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Term
Karl Marx
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Definition
German philosopher, economist, sociologist, historian, journalist and socialist.
- set understanding of labor and capital
- Communist manifesto |
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Term
Production Possibilities Frontier (PPF)
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Definition
| Shows the possible combinations of two types of goods that can be produced when available resources are employed efficiently. Points along the curve show possible combinations. Points outside the curve show impossible combinations. |
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