free market economy

command system

economic system characterized by a central authority that makes the major economic decisions.

socialism

economic system in which government owns some factors of production and has a role in determining what and how goods are produced.

capitalism

economic system in which private citizens own and use the factors of production in order to generate profits.

market

meeting place (or arrangement) where buyers and sellers interact; this may be local, regional, national, or global.

economic systems

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

Sustainability

The ability to keep in existence or maintain. A sustainable ecosystem is one that can be maintained

private property

fundamental feature of capitalism in that individuals own and control their possessions as they wish (houses, businesses, etc)

freedom

One of the 5 main goals= people (especially thinking buyers & sellers) can choose to do as they want

equity

One of the 5 main goals of American economy= fairness (different than 'equality' which not everyone has as a goal)

growth

One of the 5 main goals of the Amer. economy= making more stuff (goods & services, not resources) than previously

efficiency

One of the 5 main goals= (a) not wasting resources *AND* (b) making what we want with those resources.

stability

One of the 5 main goals= having a job/ able to pay bills, etc (at a personal level), or having low unemployment & low inflation (at a societal level)

the three questions for all society

WHAT/ HOW/ FOR WHOM to produce (goods & services)

voluntary exchange

act of buyers and sellers freely and willingly engaging in market transactions; a characteristic of capitalism and free enterprise.

free enterprise

an economic system in which privately owned businesses have the freedom to operate for a profit with limited government intervention.

profit motive

driving force that encourages people and organizations to improve their material well-being; characteristic of capitalism and free enterprise.

market economy

economic system in which supply, demand, and the price system help people allocate resources; same as free enterprise economy.

traditional economy

economic system in which the allocation of scarce resources, and other economic activity, is the result of ritual, habit, or custom.

public property

property that is owned by the government (for the whole public/society), such as parks and city buildings in the USA

"greed"

something in ALL of us... (remember we have UNLIMITED wants), which is a motivator to act

human capital investment

spending on training and education which allows workers to be able to produce more output in the future

Adam Smith

the "big guy" in economics/ capitalism-- said greediness actually HELPS society (due to the Invisible Hand)

"the Invisible Hand"

the idea that there is a force (our greediness) that motivates to act in certain ways (our benefits!), but in so doing we serve others/ help society gets what it wants.

competition

the struggle among sellers to attract consumers.

ration

to allocate or distribute

Scarcity

unlimited wants exceed the limited resources available to fulfill those wants