Economic Systems Review

1. Economic SystemsReview Economics Mr. Bordelon

2. Key Terms • System that combines the free market with some government intervention.

3. Key Terms • System that combines the free market with some government intervention. • Mixed economy.

4. Key Terms • One’s own personal gain.

5. Key Terms • One’s own personal gain. • Self-interest.

6. Key Terms • The doctrine that states that government generally should not intervene in the marketplace.

7. Key Terms • The doctrine that states that government generally should not intervene in the marketplace. • Laissez-faire.

8. Key Terms • System in which the central government makes all decision on the production and consumption of goods and services.

9. Key Terms • System in which the central government makes all decision on the production and consumption of goods and services. • Centrally-planned or command economy.

10. Key Terms • The struggle among producers for the dollars of consumers.

11. Key Terms • The struggle among producers for the dollars of consumers. • Competition.

12. Key Terms • System in which decisions on production and consumption of goods and services are based entirely on exchange, or trade. • Free market or market economy.

13. Key Terms • Socialism—democratic choice regarding public policy/social policy. • Communism—pure government control.

14. Main Ideas • What two concepts drive the free market economy?

15. Main Ideas • What two concepts drive the free market economy? • Competition and self-interest.

16. Main Ideas • What are the three economic questions that every economic system must answer?

17. Main Ideas • What are the three economic questions that every economic system must answer? • What are we going to make? • How are we going to make it? • Who’s going to buy it?

18. Main Ideas • What is the seller’s incentive in a free market/mixed economy?

19. Main Ideas • What is the seller’s incentive in a free market/mixed economy? • To make profits on sales.

20. Main Ideas • What is the buyer’s incentive in a free market/mixed economy?

21. Main Ideas • What is the buyer’s incentive in a free market/mixed economy? • To buy high quality goods at the lowest price possible.

22. Main Ideas • What should a government not do in a mixed economy and why?

23. Main Ideas • What should a government not do in a mixed economy and why? • Compete in the private sector because it would drive out private competitors.

24. Main Ideas • Explain the circular flow diagram.

25. Main Ideas • What is the difference between the product and factor markets?

26. Main Ideas • What is the difference between the product and factor markets? • In the product market, goods and services are bought. • In the factor market, the factors of production (resources) are bought.

27. Main Ideas • Adam Smith believed that buyers and sellers communicated indirectly to make their needs and wants known. What is this concept called?

28. Main Ideas • Adam Smith believed that buyers and sellers communicated indirectly to make their needs and wants known. What is this concept called? • The invisible hand of the marketplace.

29. Main Ideas • Adam Smith advocated a doctrine in which the government should interfere as little as possible in the economy. What is this called?

30. Main Ideas • Adam Smith advocated a doctrine in which the government should interfere as little as possible in the economy. What is this called? • Laissez-faire.

31. Main Ideas • Karl Marx is the founder of what economic system in which workers, not capitalists, dominate.

32. Main Ideas • Karl Marx is the founder of what economic system in which workers, not capitalists, dominate. • Communism.

33. Main Ideas • What is the major advantage and disadvantage of command economies?

34. Main Ideas • What is the major advantage and disadvantage of command economies? • Concentration of production.

35. Main Ideas • The United States is what type of economy?

36. Main Ideas • The United States is what type of economy? • Mixed economy.