Economics Chapter 2

War-devastated South Korea went from exporting __________________ consumer goods to becoming a leader in production and export of __________________ appliances, televisions, and even durable goods, such as __________________.

Few; home; automobiles

In Russia, the economy has gone from Stalin's __________________-__________________ Plans, directed by the central committee, or __________________, to Mikhail Gorbachev's __________________ in the 1980s. This led to increased __________________ of property, which continued until__________________, Boris Yeltsin's successor, took power.

Five-year; Gosplan; perestroika; freedom; Russian president Boris Yeltsin

Gross domestic product divided by the number of people in the population.

GDP per capita

the central autority that devised the plans and directed overall economic activity in Soviet Union Russia

Gosplan

The main difference between capitalism in Japan and in the United States is intense __________________ involvement with the private sector. Additionally, tightly-knit firms governed by a board of directors, called the __________________, reduces the threat of __________________.

Government; keiretsu; individual firms

an attempt to reolutionize industrial and agricultural production almost overnight

Great Leap Forward

China's 1958 Five-Year Plan, the __________________, tried to communalize Chinese _____________ and _________________. The results of its performance led China to ____________ the Soviet model.

Great Leap Forward; industrial; agricultural production; abandon

Even after capitalist practices are in place, people may have trouble adjusting to new __________________, such as taking __________________, interpreting __________________, making their own __________________, and fending for themselves in the marketplace.

Incentives; initiative; prices; decisions

__________________ has always been a feature of the Taiwanese economy, but experts warn that the _______________ ____________________ _______________ will hamper growth in the future.

Planning; centralized planning practices

Singapore's high GDP is largely due to is specialization in __________________ services, __________________, and __________________.

Telecommunication; software; biotechnology

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.

Traditional Economy

a comprehensive, centralized economic plan designed to achieve rapid industrialization

five-year plan

Formerly the model of European socialism, __________________ now mixes __________________-__________________ capitalism and generous __________________.

Sweden; high-tech; benefits

What source covers the cost of programs that are run by the government?

Taxes

Although China has adopted many __________________ practices since the 1980s, two significant barriers to its growth are its __________________ population and air and water __________________.

Capitalistic; aging; pollution

What country has become one of the fastst growing economies in the world and the second-largest economy?

China

Why are most economies in the wold today considered mixed economies

Economic systems defined by economists are extreme cases useful for classification and descriptive purposes, there is much more diversity in the real world, seismic domestic events invite change, and nations tend to evolve over time shedding policies that don't work and adding ones that do.

the association of European nations created in 1933 to develop a single market with full economic and political cooperation

European Union (EU)

Transitioning countries must take into account the costs of capitalism, because they will experience its __________________—such as the Great Depression's __________________ and __________________ __________________—before they experience its benefits.

Instabilities; unemployment; social unrest

Most countries in South America have tended towards socialism and __________________. __________________'s conversion to a free market has been a great success. Political instability and __________________ have affected Argentina's transition, and __________________ continues to resist capitalism.

Isolationism; Chile; nationalization; Venezuela

Major disadvantages of a Command Economy

Leaders provide for themselves at the expense of the general population, loss of individual freedom to choose, and the production of low-quality goods, an economy with major elements of command requires large decision-making bureaucracies, rewards for individual initiatives that are rare, planning bureaucracy lacks flexibility to promptly deal with major problems.

In Russia, after the Soviet Union collapse, influential __________________ retained power by acquiring large numbers of __________________, so the ruling class gained __________________ power in place of __________________ power.

Leaders; vouches, economic; political

To help convert state-owned property to __________________ property, transitioning countries have used __________________—certificates that individuals or groups can use to purchase that property.

Private; voucher

Numerous Eastern European countries transitioned to capitalism in a relatively __________________ time period after the fall of the Soviet Union. __________________ was the first, with its labor union called __________________. Poland joined the __________________ Union, an association of European nations to develop a single market, in 2004. Hungary's transition was helped by the fact that it had a thriving ____________________________________ where entrepreneurs and merchants sold goods illegally.

Short; Poland; Solidarity; European; black market

the independent and sometimes illegal labor union established in 1980

Solidarity

Capitalism has led many countries to an improved __________________ of __________________, and __________________ coverage broadcasts information about the wealth capitalist countries can generate. This, plus the __________________ of the Soviet Union, has inspired countries to attempt the difficult transition to capitalism.

Standard of living; media; collapse

allowance, portion, share

allocation

the forced common ownership of all agricultural and industrial enterprises

collectivization

a market in which entrepreneurs and merchants sell goods illegally

black market

a central authority makes the major decisions about WHAT, HOW, and FOR WHOM to produce

command economy

a state of economic and social affairs where everyone would contribute according to his or her abilities and consume according to his or her needs

communism

economic system where private citizens own and use the factors of production for their own profit or gain

capatalism

methods of production that use large amounts of capital for every person employed

capital-intensive

In a Command Economy who makes the major decisions about What, How, and For Whom to produce?

central authority

Using of scarce resources, and all other economic activity, which stems from ritual, habit, or custom.

characteristics of a Traditional Economy

disadvantages of traditional economy

discourages new ideas and new ways of doing things, punishment for different actions, economic stagnation, lower standard of living than in other economic system s

organized way a society provides for the wants and needs of its people

economic systems

shifting resources on a massive scale from one thing to another

emphasizing

Advantages of a traditional economy

everyone knows what role to play, little uncertainity of what to prouce, little on how to produce, the for whom is answered by the customs and tradititions of society

the worst period of economic decline in US history, which lasted from approxamately 1929 to 1939

great depression

A national policy of avoiding involvement in world affairs

isolationism

a tightly knit group of firms governed by an external board of directors

keiretsu

an arragnement where buyers and sellers interact to determine the prices and quantities of goods and services

market

where the WHAT, HOW, and FOR WHOM questions are primarily answered by the people who make supply and demand decisions in their own best intrests

market economy

economic systems where tradition, government, and markets each answer some of the WHAT, HOW, and FOR WHOM questions

mixed economies

conversion of private property to governmental ownership

nationalization

Which members of society benefit from a mixed economy?

people who want to pursue an alternate path than their family has

A restructuring of the Soviet economy to permit more local decision making, begun by Mikhail Gorbachev in 1985.

perestroika

the conversion of state-owned factors and other property to private ownership

privatization

A modern and somewhat more liberal, version of the command economy

socialism

an economic and politicla system in which the government owns some, but not al, of the factors of production

socialism

motionlessness; inactivity

stagnation

Disadvantages of a market economy

tendency for an inequitable distribution of wealth, poorer work conditions, and environmental degradation

certificates that could be used to purchase government-owned property

vouchers

advantages of market economy

there is a high degree of individual freedom, it gradually and changes over time, it has relatively no government interference, the decision making is decentralized, there are varieties of goods and services produced

main characteristics of mixed economies

tradition, government, and markets all answer some of the what, how, and for whom goods questions

the use of scarce resources—and nearly all other economic activity—stems from ritual, habit, or custom

traditional economy

something someone decides to do or start

undertaking