Econ ch. 2

economic system in which supply, demand, and the price system help people make economic decisions and allocate resources. (ex. Great Britain, Australia and the U.S. is often put in this category)

• Modified free enterprise economy (market economies, capitalistic, or pure free enterprise)

• Traditional Economy

• Command Economy

• Mixed Economy

Producers and sellers compete with one another to attract consumers, while lowering costs. Consumers compete with one another to obtain the best products at the lowest prices.

• Profit

• Inflation

• Competition

• Capitalism

Role of consumer as ruler of the market when determining the types of goods and services produced.

• Buyer

• Seller

• Voluntary exchange

• Consumer sovereignty

The extent which a person or organization is better off financially at the end of a period of time than they were at the beginning.

• Income

• Profit

• Profit motive

• Social Security

Economic system in which the allocation of scarce resources and other economic activities are based on ritual, habit, or custom. (ex. Indigenous people such as the central African Mbuti or the Australian Aborigines)

• Command Economy

• Mixed Economy

• Modified Free Enterprise Economy

• Traditional Economy

A rise in the general level of prices over time.

• Inflation

• Fixed income

• Capitalism

• Social Security

Federal program of disability and retirement benefits that covers most working people.

• Inflation

• Profit

• Social Security

• Fixed Income

Economic system with a central authority that makes the major economic decisions. (ex. North Korea).

• Traditional Economy

• Command Economy

• Mixed Economy

• Market Economy

To provide as many jobs as possible...became law when Congress passed the Employment Act of 1946 after WWII.

• Profit Motive

• Private Property Rights

• Voluntary Exchange

• Full Employment

An organized way in which a society provides for the wants and needs of its people.

• Voluntary Exchange

• Economic System

• Capitalism

• Private Property Rights