Economic Systems Flashcard

Front

What is an economic system?

Back

An organized way of providing for the wants and needs of their people.

Front

What are the three basic economic questions every society must answer?

Back

How to produce, for whom to produce, and what to produce.

Front

What is a traditional economy?

Back

An economy where traditional societies use ritual/habitat/custom to answer what, how, and for whom to produce.

Front

What is a command economy?

Back

An economy where the government makes most of the economic decisions.

Front

What does the central authority do in a command economy?

Back

Makes major decisions about what, how, and for whom to produce.

Front

What is a market economy?

Back

An economy where consumers and businesses jointly answer questions of what, how, and for whom to produce.

Front

Who answers the questions of what, how, and for whom to produce in a market economy?

Back

Consumers and businesses.

Front

What are the advantages of a market economy?

Back

It rewards individual initiative, encourages innovation, and provides a wide variety of goods and services.

Front

What is a mixed economy?

Back

An economy where consumers and businesses jointly answer questions of what, how, and for whom to produce.

Front

What is the role of the government in a mixed economy?

Back

To make some economic decisions.