Forms of Economic Systems and Forms of Governments

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24 Terms
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Economics

The study of how people satisfy their wants and needs. Also the study of supply and demand

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Traditional Economy

People are concerned mainly with obtaining food, clothing, shelter, and other

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Market Economy

Operate in response to the laws of supply and demand and to market forces such as the scarcity of goods and resources

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Command Economy

Operate at the will of the government. The government controls industry and agriculture and decides what goods will be produced, how those goods will be made, and the prices that consumers will pay for them.

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Globalization

The reduction of barriers to the movement of goods and services, workers, and money among nations.

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Economic System

A system of production, resource allocation and distribution of goods and services within a society or a given geographic area.

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Capitalism

An economic system based on private ownership of capital + factors of production.

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Free Market

Production and distribution of goods are determined by market. What people are willing to pay and how much the company can make.

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Democracy

Rule by the people. People have the power to make laws.

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Constitutional Monarchy

Monarchs have limited power and there is a democracy in place for real power.

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Republic

People vote for their representatives to make laws

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Dictatorship

Single authority or ruler who usually takes power by force

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Absolute Monarchy

Someone who is born into power and holds all the power.

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Totalitarian Dictator

Dictator with control over all aspects of the country and people’s lives.

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Benevolent Dictator

Rules for the best of the people.

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Socialism

An economic system in which the means of production are controlled by the state or the people - not individuals.

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Communism

A form of socialism that abolishes private ownership

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Bourgeoisie

French for “town dweller.” Middle class. In Communist terms, they are the people who own the means of production

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Gross Domestic Product

The sum of all goods and services produced in a country within one year. Used to express the size of an economy.

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Laissez-faire

French for “let do.” Used to describe a “hands-off” approach to the economy. Little/no government interference.

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Means of production

The facilities and resources for producing goods.

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Proletariat

Workers, working-class people

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Subsidy/Subsidize

Government provides financial support (to business or public need)

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Capital

Wealth (money, gold & silver, stocks, bonds)

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