Economic Systems Review Mr. Bordelon

Key Terms System that combines the free market with some government intervention.

Key Terms System that combines the free market with some government intervention. Mixed economy.

Key Terms One’s own personal gain.

Key Terms One’s own personal gain. Self-interest.

Key Terms The doctrine that states that government generally should not intervene in the marketplace.

Key Terms The doctrine that states that government generally should not intervene in the marketplace. Laissez-faire.

Key Terms System in which the central government makes all decision on the production and consumption of goods and services.

Key Terms System in which the central government makes all decision on the production and consumption of goods and services. Centrally-planned or command economy.

Key Terms The struggle among producers for the dollars of consumers.

Key Terms The struggle among producers for the dollars of consumers. Competition.

Key Terms System in which decisions on production and consumption of goods and services are based entirely on exchange, or trade. Free market or market economy.

Key Terms Socialism—democratic choice regarding public policy/social policy. Communism—pure government control.

Main Ideas What two concepts drive the free market economy?

Main Ideas What two concepts drive the free market economy? Competition and self-interest.

Main Ideas What are the three economic questions that every economic system must answer?

Main Ideas What are the three economic questions that every economic system must answer? What are we going to make? How are we going to make it? Who’s going to buy it?

Main Ideas What is the seller’s incentive in a free market/mixed economy?

Main Ideas What is the seller’s incentive in a free market/mixed economy? To make profits on sales.

Main Ideas What is the buyer’s incentive in a free market/mixed economy?

Main Ideas What is the buyer’s incentive in a free market/mixed economy? To buy high quality goods at the lowest price possible.

Main Ideas What should a government not do in a mixed economy and why?

Main Ideas What should a government not do in a mixed economy and why? Compete in the private sector because it would drive out private competitors.

Main Ideas Explain the circular flow diagram.

Main Ideas What is the difference between the product and factor markets?

Main Ideas What is the difference between the product and factor markets? In the product market, goods and services are bought. In the factor market, the factors of production (resources) are bought.

Main Ideas Adam Smith believed that buyers and sellers communicated indirectly to make their needs and wants known. What is this concept called?

Main Ideas Adam Smith believed that buyers and sellers communicated indirectly to make their needs and wants known. What is this concept called? The invisible hand of the marketplace.

Main Ideas Adam Smith advocated a doctrine in which the government should interfere as little as possible in the economy. What is this called?

Main Ideas Adam Smith advocated a doctrine in which the government should interfere as little as possible in the economy. What is this called? Laissez-faire.

Main Ideas Karl Marx is the founder of what economic system in which workers, not capitalists, dominate.

Main Ideas Karl Marx is the founder of what economic system in which workers, not capitalists, dominate. Communism.

Main Ideas What is the major advantage and disadvantage of command economies?

Main Ideas What is the major advantage and disadvantage of command economies? Concentration of production.

Main Ideas The United States is what type of economy?

Main Ideas The United States is what type of economy? Mixed economy.