Economic Systems
The main questions of the economic systems
1) What and how many goods and services should be produced 2) How they should be produced? 3) Who gets the goods and services that are produced?
Competition, profit motive, private property, private enterprise, consumer sovereignty
5 Tenants of Capitalism
LDC
Agriculture remains the dominant economic activity.
Ideas or theories not actually put into practice today
Capitalism, Free enterprise, Market Economy, Pure market/capitaliam
total government control
Command economy
Command economy
Distribute income equally among citizens
Traditional Economies
Habit and custom determine all rules for all economic activity. Individuals are not free to make decisions based on what they would like to have. Instead all decisions are made by their elders or ancestors.
Less developed country
LDC
More developed country
MDC
no government control
Market economy, and traditional economy
limited government control
Mixed
newly industrialized country
NIC
Equal Income distribution, Government Control of all major production decisions, Public ownership of land and other means of production
The three main goals of Socialism
Less Developed Country
a fairly poor country without much industrial development
Consumerism
a modern movement for the protection of the consumer against useless, inferior, or dangerous products, misleading advertising, pricing, etc
Newly Industrialized Country
a nation switching from an agricultural to an industrial economy and is experiencing rapid economic growth.
Democratic Socialism
a political ideology advocating a democratic political system alongside a socialist economic system, involving a combination of political democracy (usually multi-party representative democracy) with social ownership of the means of production.
Regulation
a rule or law.
More Developed Country
a sovereign state that has a highly developed economy and advanced technological infrastructure relative to other less industrialized nations.
Socialism
a system of organization or government where all property, industry, and capital is owned by the community, not individuals.
Economic System
a system of production and exchange of goods and services as well as allocation of resources in a society.
Command Economy
a system where production, investment, prices and income are determined by the government
Communism
a type of economy where all property, including land, factories and companies, is held by the government
Private Enterprise
an economic activity undertaken by private individuals or organizations under private ownership.
Laissez Faire
an economic system in which transactions between private parties are free from government interference such as regulations, privileges, tariffs, and subsidies.
Capitalism
an economic system where the free exchange of goods and services is controlled by individuals and groups, not the state.
A Monopoly
an exclusive control of a good or service.
Market Economies
are capitalistic economic systems in which there is free competition and prices are determined by the interaction of supply and demand.
Mixed Economies
are economies in which there are elements of both public and private enterprise.
Quaternary
concerned with processing, management, and distribution of information (administration)
Socio-economic
division in society based on income level and type of employment. It is based on a combination of social and economic factors.
Tertiary
do not involve directly acquiring and remaking natural resources
subsidence farming
farming for food not profit
Socialism
for the good of society as whole, the state should own and run basic industries such as transportation, communications, banking, coal mining, and the steel industry.
Free Enterprise
is an economic and political doctrine holding that a capitalist economy can regulate itself in a freely competitive
Consumer Sovereignty
is the assertion that consumer preferences determine the production of goods and services.
MDC
more technology and manufacturing. The standard of living for that average citizen is very high
Public Ownership
ownership by the state; nationalization.
Welfare state
people as a whole are entitled to the wealth of the nation (AKA)
NIC
primarily manufacturing and industrial activities
Traditional Economies
productions and exchanges of goods and services that rely on local culture, local resources, and inheritance.
Primary
taking or using natural resources directly from the Earth
Profit Motive
the desire for profit that motivates one to engage in business ventures.
Communism
the state makes all economic decisions. The state owns and operates all major farms, factories, utilities, and stores.
Income Distribution
the way national income is divided among households in the economy.
Secondary
use raw materials to make a tangible product