Economics - Ch. 2 Vocab

economy

organized way a society provides for the wants and needs of its people

economic system

organized way a society provides for the wants and needs of its people

traditional economy

economic system in which the allocation of scarce resources and other economic activity is the result of ritual, habit, or custom

command economy

economic system characterized by a central authority that makes most of the major economic decisions

market economy

economic system in which supply, demand, and the price system help people make decisions and allocate resources; same as free enterprise economy

social security

federal program of disability and retirement benefits that covers most working people

inflation

rise in the general level of prices

fixed income

income that does not increase even though prices go up

capitalism

economic system in which private citizens own and use the factors of production in order to generate profits

free enterprise

economy in which competition is allowed to flourish with a minimum of government interference; term used to describe the American economy

voluntary exchange

act of buyers and sellers freely and willingly engaging in market transactions; characteristic of capitalism and free enterprise

private property rights

fundamental feature of capitalism, which allows individuals to own and control their possessions as they wish; includes both tangible and intangible property

profit

extent to which persons or organizations are better off at the end of a period than they were at the beginning; usually measured in dollars

profit motive

driving force that encourages people and organizations to improve their material well-being; characteristic of capitalism and free enterprise

competition

the struggle among sellers to attract customers while lowering costs

consumer sovereignty

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

mixed economy

free enterprise market economy where proper carry on their economic affairs freely, but are subject to some government intervention and regulation

modified private enterprise economy

free enterprise market economy where proper carry on their economic affairs freely, but are subject to some government intervention and regulation