adams

What characterizes an authoritarian government?

Government demands strict obedience; lack of freedom.

Who benefits and who suffers most from a centrally planned economy? How?

Government officials benefit because they can favor themselves; ordinary people suffer from lack of freedom and choices.

Are there more New Home Sales each month or Existing Home Sales? *

More existing

socialism

a range of economic and political systems based on the belief that wealth should be distributed evenly throughout society

safety net:

a set of government programs that protect people who face unfavorable economic conditions

invisible hand:

a term coined by Adam Smith to describe the self-regulating nature of the marketplace

free market economy

an economic system in which decisions on the three key economic questions are based on the voluntary exchange in markets

free enterprise system

an economic system in which investments in firms are made in a free market by private decision rather than by state control

centrally planned economy

an economic system in which the government makes all decisions on the three key economic questions

traditional economy

an economic system that relies on habit, custom, or ritual to decide the three key economic questions

self-interest

an individual's own personal gain

firm

an organization that uses resources to produce a product or service, which it then sells

What do people supply in return for factor payments?

and, labor, capital

command economy

another name for a centrally planned economy

market

any arrangement that allows buyers and sellers to exchange things

The United States economy is a mixed economy

based on a free market, but allowing some government intervention

In what kind of an economy does the government make all the decisions?

centrally planned

What "invisible hand" regulates the free market economy?

competition and self-interest

When did Social Security start in the United States?

1937

How many credits are required to qualify for Social Security?

4

In the United States, Consumer Investment/Consumption accounts for how much of the GDP? *

70%

What part of the US government pays for Medicaid?

A combination of Federal and State Governments

Who wrote the "Wealth of Nations" in 1776?

Adam Smith

How does laissez faire differ from a centrally planned government?

An absence of government role versus complete government control.

How should goods and services be produced?

As a society decides how to produce its goods and services, it must consider how best to use its land, labor, and capital.

How is China carrying out privatization?

By selling government-owned firms to individuals and allowing them to compete.

Which country's GDP is growing faster

China

Why are free market economies able to attain economic growth?

Competition encourages innovation, which causes growth

What goals and values affect how a society answers the key economic questions?

Each society is guided by its economic system, which affects the way in which it does business within the society itself and with other societies.

What goods and services should be produced?

Each society must decide what to produce in order to satisfy the needs and wants of its people

What kind of tax pays for Social Security? *

FICA Tax

How does the U.S. government protect private property?

Fifth and Fourteenth Amendments and patent laws.

The ways in which factors of production are combined determines the answer to which economic question?

How will it be produced?

What is the Social Security COLA?

Inflation protection for Social Security recipients

ISM stands for

Institute for Supply Management

How does specialization make us more efficient?

It is easier for people to learn one task or a few tasks very well than to learn them all.

When the FOMC announced that it is "unwinding" its balance sheet, what does that mean? *

It will raise interest rates

Who is the Chairperson of the Board of Governors of the Federal Reserve? *

Janet Yellen

What does a centrally planned economy oppose that a market economy encourages?

Private property, free market pricing, competition and choice

Explain what Adam Smith meant by the "invisible hand" of the market place?

Producers acting in self-interest, will regulate the market by competing with each other to produce goods and services that consumers want.

For most people in the United States, what is their largest investment? *

Real Estate

How do self-interest and competition affect the free market?

Self-interest moves consumers and producers to act, competition moderates prices.

How does socialism and communism differ?

Socialism: government often owns major industries but not all means of production; can have a democratic government Communism: government owns everything; always has an authoritarian government

Why aren't all workers paid the same amount in factor payments for the resource they provide?

Society value different kinds of labor differently.

communism

a political system in which the government owns and controls all resources and means of production and makes all economic decisions

Why does a government provide a safety net for its people?

To give security to retired, injured, or unemployed people.

Why have some nations begun an economic transition to a free enterprise system?

To keep pace with the global economy

What are the three questions that every society must answer?

What should we produce How will we produce it For whom are we producing it

How does an entrepreneur make a profit?

When income (revenue) exceeds expenses a Profit is generated.

mixed economy

a market-based economic system in which the government is involved to some extent

economic transition

a period of change in which a nation moves from one economic system to another

household

a person or group living in a single residence

authoritarian

describing a form of government which limits individual freedoms and requires strict obedience from their citizens

Who consumes goods and services?

etermined by how societies distribute income. Through factor payments, including profits, societies can determine who will be the consumers of the goods and services produced.

To improve the standard of living, a nation's economy must

grow through innovation

Who owns the factors of production in the U.S. ?

households

standard of living

level of economic prosperity

Does every citizen in the United States qualify for Social Security retirement benefits? *

no

private property

property that is owned by individuals or companies, not by the government or people as a whole

profit

the amount of money a business receives in excess of expenses

factor market

the arena of exchange in which firms purchase the factors of production from households

product market

the arena of exchange in which households purchase goods and services from firms

specialization

the concentration of the productive efforts of individuals and businesses on a limited number of activities

laissez faire

the doctrine that government generally should not intervene in the marketplace

In a Command economy

the government replaces the firms in the circular flow diagram

incentive

the hope of reward or fear of penalty that encourages a person to behave a certain way

factor payment:

the income people receive in return for supplying factors of production

consumer sovereignty

the powers of consumers to decide what gets produced

innovation

the process of bringing new methods, products, or ideas into use

privatization

the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the marketplace

economic system

the structure of methods and principles that a society uses to produce and distribute goods and services

competition

the struggle among producers for the dollars of consumers