Economics

Karl Marx

"Father of Communism"

What are two nicknames for capitalism?

"Free enterprise system" "market economy"

What theory did Adam Smith use to use resources effectively?

"Invisible Hand"

What book did Karl Marx write?

"The Communist Manifesto"

What is the US GDP compared to the Democratic Republic of Congo?

$17.7 trillion $67 billion

Biggest pro to capitalism

A bigger chance to have wealth and succes

Eventually, what would happen under Karl Marx's theory of Communism?

A classless society would develop

What did Karl Marx believe should take place in order to switch to communism?

A revolution

Who developed laissez-faire economics and what does it mean?

Adam Smith "Let alone"

Who developed capitalism and how did he develop it

Adam Smith "Wealth of Nations" (1776)

The Industrial Revolution was a movement from what?

Agricultural to an industrial nation

Natural Resources

All the "gifts of nature" that make production possible Ex. minerals, wood, forests

Entrepreneur

And individual who starts a new business, introduces products, and improves processes ex. bill gates

Needs

Basic necessities for survival

Who make the 3 economic questions in America?

Business people

Prioritizing

Choosing what item you buy according to your needs

What two economic systems are Socialist countries made up of?

Command and Market

What event in history led to the formation of Socialist countries?

Industrial Revolution

Services

Intangible activities performed for money

Why is NDP more accurate than GDP?

It subtracts the depreciation from GDP

Biggest con to capitalism

More people cannot provide for themselves

4 Factors of Production

Natural Resources Labor Capital Entrepreneur

What does Gross Domestic Product and Net Domestic Product determine?

Overall success of an economy

Communism characteristics today

Party holds all decision making power regarding government and economics FOP controlled by government (nationalization) No private property Goods and services available to all (not high standard of living)

Capitalism Profit motive

People are free to risk their money to make money

Capitalism Economic Freedom

People decide in terms of job when and where to work

Capitalism Markets

Places where goods are bought/ sold

Why did people seek economic changes

Poor working conditions

How do you calculate GDP?

Price of an item times number of items sold

Standard of living

Quality of life based on wealth and how well our wants and needs are met

Factors of Production

Resources necessary to produce all goods and services

Allocating

Setting money aside to pay for certain wants or needs

What does GDP help determine?

Standard of living

Capitalism Competition

Struggle between buyers and sellers

What is economics?

Study of how we make decisions when resources are scarce Studies how things are made, bought, sold and used

Goods

Tangible items that are bought, sold, or traded

Under communism, what type of party system and government control would their be?

one party system strict government control (not permanent)

Nation addresses scarcity by addressing what three economic questions?

What to produce How to produce For whom to produce

Under Socialism, what should all people have access to?

basic goods and services

Capitalism Voluntary Change

buyers and sellers freely participate in business deals

Who pays for the goods and services under socialism?

the wealthy "welfare states"

What are examples of Socialism countries?

Denmark Finland Netherlands Canada Sweden Ireland Belgium

Under communism, who would establish the government?

Dictatorship of the Proletariat (working class)

Scarcity

Don't have enough resources to produce what we want

Economic Category Traditional

Economic Questions answered by following long established patterns Ex. Less established countries

Economic Category Command

Economic Questions answered by government Ex. N Korea

Economic Category Market

Economic questions answered by entrepreneurs or business people Ex. USA

Capitalism

Economic system where private citizens own and use factors of production to produce a profit ex. USA

How would wealth be distributed under Socialism?

Equally

What did Karl Marx believe would happen after revolution?

Everyone would be equal

What are benefits of Socialism?

Free healthcare Education Retirement benefits Low rent housing

Capitalism Private Property Rights

Freedom to own and dispose of property; gives people incentive

Opportunity Cost

Giving up something you want in order to get something else

Under socialism, what can the government do?

Government owns some FOP Government may operate some businesses, but not others

Economic Category Mixed

Having characteristics of more than 1 economic system Most common: Command and Market

What did Karl Marx believe about capitalism?

Life is a struggle between bourgeoisie (wealthy) and proletariat (working class)

Depreciation

Loss of value b/c of wear and tear

Capital

Manufactured goods used to make other goods and services ex. machines and tools used to assemble something

What are the 6 factors that make capitalism function

Markets Economic Freedom Private Property Rights Competition Profit motive Voluntary exchange

Supply

The amount of a good or service that is available to the public

Demand

The desire of a customer for a good or service

Income

The money that people receive for working

Labor

The nations workforce; human resources ex. babysitter, doctor, lawyer

Wants

Things we would like to have but don't need

Gross Domestic Product

Total value in dollars of all goods and services produced in a year

How does a capitalist government function?

Under little government involvement