Economic systems
Centrally Planned Economy
A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the interaction between consumers and businesses
Authoritarian
A government in which one leader or group hold absolute power.
Subsidy
A government payment that supports a business
Market Economy
A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's individual citizens and businesses. There is little government intervention or central planning.
Product Market
A market in which products are sold by firms and bought by households
Market
A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.
Negative Externality
A negative externality is a cost that is suffered by a third party as a result of an economic transaction.
Free Rider
A person who receives the benefit of a good but does not have to pay for it
Communism
A political and economic system where factors of production are collectively owned and directed by the state on behalf of the people
Competition
A rivalry in which every seller tries to get what other sellers are seeking at the same time: sales, profit, and market share by offering the best practicable combination of price, quality, and service.
Safety Net
A set of government programs that protect people who face poor economic conditions
Positive Externality
A situation that benefits someone who is not involved in producing or consuming a good
Public Transfer Payment
A transfer payment in which the government transfers income from taxpayers to recipients who do not provide anything in return
Externality
An economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume
Free Enterprise System
An economic system based on private ownership, Also known as Capitalism.
Command Economy
An economic system in which the government makes all economic decisions. (Russia, north korea, etc...)
Socialism
An economic system in which the production and distribution of goods are controlled substantially by the government rather than by private enterprise, and in which cooperation rather than competition guides economic activity.
Mixed Economy
An economy that has elements of traditional, command, and market systems
Global Economy
Economic activity that crosses national borders
Circular Flow Model
Economic model that shows the flow of money, factors of production, goods, and services between sectors and markets
Laissez Faire
French for 'leave alone', laissez-faire is an economic theory that became popular in the 18th century. The driving idea behind laissez-faire as a theory was that the less the government is involved in free market capitalism, the better off business will be, and then by extension society as a whole.
Public Goods
Goods or services that government supplies to its citizens; can be used by many individuals at the same time without reduction of benefits to a singular person
Factor Market
Market in which firms purchase the factors of production from households
Transfer Payment
Payments made to groups or individuals when no good or service is received in return
Open Opportunity
The ability of everyone to enter and compete in the market place
Specialization
The concentration of the productive efforts of individuals and firms on a limited number of activities
Profit
The financial advantage or benefit of a transaction or investment / including the money gained after subtracting production costs
Consumer Sovereignty
The idea that consumers have ultimate control over what is produced because they buy what they want and reject what they don't want
Private Property Rights
The right that people have the ability to control their possessions and use them as they wish
Economic System
The way a society uses resources to satisfy its people's wants (scarcity)
Privatize
To change from government or public ownership to private ownership
Nationalize
To change from private ownership to government or public ownership
Traditional Economy
Traditional economy is an original economic system in which traditions, customs, and beliefs help shape the goods and the services the economy produces, as well as the rules and manner of their distribution. Countries that use this type of economic system are often rural and farm-based. Often not productive
Voluntary Exchange
Voluntary exchange is the act of buyers and sellers freely and willingly engaging in market transactions. Moreover, transactions are made in such a way that both the buyer and the seller are better off after the exchange than before it occurred.
Modified Free Enterprise Economy
a type of mixed economy which includes some government protections, provisions, and regulations to adjust the free enterprise system.
Capitalism
an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.
Free Contract
the concept that people may decide what agreements they want to enter into.
Profit Motive
the desire for financial gain as an incentive in economic activity.