Basic Economic Concepts

What is Economics?

The study of managing money

What does Microeconomics focus on?

choices made by individuals and businesses

What does Macroeconomics focus on?

the economy as a whole

What is scarcity?

Limited quantities of resources to meet unlimited wants

What are the factors of production?

land, labor, capital

What questions must every economy answer?

What to produce, how to produce, and for whom to produce.

What does economic stability refer to?

A condition where an economy experiences constant output growth and low inflation.

What does economic justice refer to?

Everyone is treated fairly in the economy.

What does economic security refer to?

The assurance that individuals will have access to basic needs such as food, shelter, and healthcare.

What does economic efficiency refer to?

The optimal production and allocation of resources to maximize output and minimize waste.

What does economic freedom refer to?

The ability of individuals to control their own economic resources and make their own economic choices.

What is the role of government in U.S. capitalism?

To regulate the economy, provide public goods, and ensure competition.

What does 'What to produce?' refer to?

The decision-making process regarding which goods and services should be produced in an economy.

What does 'How to produce?' refer to?

The determination of who will receive the goods and services produced.

What are the economic goals?

To achieve economic growth, stability, efficiency, and equity.

What does economic growth refer to?

An increase in the production of goods and services in an economy over time.

What are the pros of socialism?

greater economic equality, security, and reduced poverty

What are the cons of socialism?

less individual incentive, economic freedom, and potential for government inefficiency

What is a mixed economy?

A mix of private and government ownership, with some government funding

What are the characteristics of communism?

Full government control and ownership, especially of major industries.

What are the pros of communism?

(Theoretically) equal access to resources and basic needs for everyone

What are the cons of communism?

Lack of personal freedom, inefficiency, and shortages

What are the pros of U.S. capitalism?

Encouragement of innovation, consumer choice, and economic growth.

What are the cons of U.S. capitalism?

Wealth inequality, "boom and bust" cycle