Unit 1: Paradox of Prosperity

Adam Smtih

First modern economist who believed that the more freedom people had, the more innovation they could have produce

Capitalism

A system of economic organization where private individuals control the production of goods and services that compete with others for business profits

Capital

The resources made by humans that help produce goods (ex: computer)

Commodity

A raw material or crop that can be bought and sold

Competition

The companies compete for the consumers money by making better products and using more innovation

Credit

money loaned to invest

enlightenment

Adam Smith was an enlightenment thinker, when people were promoting individual rights, including economic rights free of monarchy control

free market economy

you can buy and sell with anyone, not just within your empire. you can buy and sell whatever you want. if there's demand by consumers maybe companies will raise the price and vice versa.

free trade

you can trade with whoever you want

Human Development Index

A long and healthy life, a good education, and a decent standard of living

Innovation

using creativity and ideas to make better goods

interest

the tax added to a loan over time

invisible hand

its a metaphor, something in the market that is guiding decision-making. It causes the balance between the supply and demand

liberal democracy

individual rights (right to vote, freedom of expression, etc.)

laissez faire capitalism

when the government has little to no control of companies, meaning that individuals have the freedom to do what they want with their business

mercantilism

monarchs had control over trade network

profit

money gained - money used to make product

sugar

most profitable commodity

supply and demand

Companies decide what to sell and how much to sell it for based on the consumers’ wants