Economy Chapter 6

Quote by Karl Marx

"The history of all hitherto existing society is the history of class struggle"

What 2 questions determine whether a nation follows a more capitalistic or socialistic philosophy?

1) Who owns the nation'a factors of production? 2) Who answers the 3 economic questions?

5 strategies of mercantilism

1) exploration 2) trade 3) domestic manufacturing 4) colonization 5) alliances/treaties/conquest

What are the 3 principal functions of gov't?

1) the gov't is to protect its citizens from foreign aggression 2) the gov't is to protect the rights of its citizens from infringements by others 3) the gov't is to provide public goods

Three economic questions

1) what will the nation produced? 2) how will the nation produce it's goods? 3) Who will receive at the nation produces

In what year did mercantilism end in America?

1776

nationalization

A central authority controls resources and makes economic decisions

What is a public good give an example.

A good or service that the nations people benefit from ex: highways

Over which of the following would a social democracy be least likely to assume control?

A shoe factory

Wealth of nations

Adam Smith refuted mercantilism

classic liberal capitalism

Adam Smith's ideal economic system

According to Adam smith, what was the root problem with mercantilism

Adam smith believed the root problem with mercantilism that money is wealth

According to Adam Smith, why do the butcher and baker provide our dinner?

Because it is in their own best interest to do so

Why do public goods often become the responsibility of the government

Because they would either not be available would be available but not affordable will be available but not consistently reliable

Socialists

Central authority committee or people in common generally on the factors of production make decisions

capitalism

Economic system characterized by private ownership and decision making

welfare state

Economic system that leans toward capitalism but has extremely high taxes

Why did mercantilism promote colonizing

Encourage colonizing new territories to acquire new supplies of the factors of production

mercantilism

Gold and silver in the government's treasury are what is important

communism

Government is no longer necessary since everyone is acting in the best interest of others

Name the factors of production

Land labor capital entrepreneurship

What does laissez faire mean?

Let alone

Capitalists

Private individuals on most of the factors of production and make most economic decisions

state capitalism

Private ownership of businesses but with frequent gov'tal intervention

In which if the following economic systems does the gov't not exist?

Pure communism

privatization

The gov't sells businesses back to private individuals

socialism

The gov't takes possession of key industries

social democracy

Transitional economic system between free markets and governmental ownership

Favorable balance of trade

When a nation sells more goods than it purchases

What is NOT one of the distinguishing characteristics of a capitalistic economy?

Workers decide all questions of policy for their particular business