Economics Economy Types

26 flashcards · Economics · by Logan Pollack

1. What are command economies opposed to?

   private property, competition, free market pricing, consumer choice

2. In a command economy, who answers the 3 economic questions?

   the government

3. How does the government control the land in a CPE?

   they own the land

4. How does the government control the labor in a CPE?

   they control where individuals work and how much they get paid

5. heavy industry

   industry that requires a large capital investment and that produces items used in other industries

6. factor market

   where the firms purchase the factors of production from the households

7. product market

   where households purchase goods and services from the firms

8. firm

   an organization that uses resources to produce a product, which it then sells

9. household/consumers

   buy goods from the product market and give money to firms

10. What three economic questions must individuals answer?

    What to produce How to produce it Who consumes what is produced

11. Individuals and privately owned businesses own what?

    the factors of production, make what they want, and buy what they want

12. How do markets address this lack of self-sufficiency

    specialization

13. laissez faire

    hands off business

14. the invisible hand

    the term economists use to describe the self-regulating nature of the marketplace

15. Advantages to the US form of a market economy

    economic efficiency, economic freedom, economic growth

16. Disadvantages to the US form of a market economy

    only those with resources can participate, the income gap, the market doesn’t answer all questions...defense, education

17. Why have mixed economies become increasingly commen?

    No single economic system has all the answers

18. Mixed Economy: Government in the Product Market

    Governments purchase goods and services in the Product Market Government also provides goods and services through the factor resources they combine

19. Transferring Money in a mixed economy

    Governments collect taxes from households & businesses

20. Circular flow in a mixed economy

21. Modern day Economies lie on a continuum, or a range with no clear distinctions.

22. The late 1970’s saw China launch the Four Modernizations (agriculture, defense, industry, & science and technology. These marked the beginning of reform and opening-up policies.

23. Mixed Economy Government in the Factor Market

    Just like businesses, the gov’t purchases the F.O.P. from households in the Factor Market

24. Economies Where Government Intervention Dominates

    China and North Korea

25. Mixed Economies Where the Market System Dominates

    United States

26. privatization

    take something owned by the government and gives control over to the citizens/private companies