Term
| describe a traditional economic system |
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Definition
| the allocation of scarce resources and nearly all other economic activity stems from ritual, habit, or custom. |
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Term
| What are the strengths of a traditional economic system? |
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Definition
-everyone knows which role to play
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Term
| what are the weaknesses in a traditional economic system? |
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Definition
| tends to discourage new ideas and new ways of doing things |
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Term
| describe a command in economy |
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Definition
| a central authority makes most of the WHAT, HOW, andd FOR WHOM decisions. |
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Term
| where can command economies be found? |
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Definition
North Korea Cuba People's Republic of China |
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Term
| what is the strength of a command economy? |
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Definition
| it can change direction drastically in a relatively shot time. |
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Term
| what are the five weaknesses of a command economy? |
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Definition
1) not designed to meet the wants and needs of individuals. 2) lack of incentives for people to work hard 3) requires a large decision-making bureaucracy 4) does not have the flexibility to deal with minor, day-to-day problems 5) people with new or unique ideas find it difficult to get ahead
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Term
| describe a market economy |
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Definition
| people and firms act in their own best interests to answer the WHAT, HOW, and FOR WHOM questions |
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Term
| list the six strengths of a market economy |
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Definition
- can adjust to change over time - the freedom that exists for everyone involved - relatively small degree of government interference - decision making in a market economy is decentralized - incredible variety of goods and services provided to consumers - high degree of consumer satisfaction
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Term
| list the two weaknesses of a market economy |
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Definition
- rewards in a market economy go to the most productive resources -markets sometimes do not work as they should |
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Term
| List the 7 economic goals in the U.S. |
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Definition
1) Economic Freedom 2) Economic Efficiency 3) Economic Equity 4) Economic Security 5) Full Employment 6) Price Stability 7) Economic Growth
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