Untitled Flashcards Set

Capitalist economy

An economic system where individuals and businesses make decisions about production and distribution based on market forces like supply and demand, primarily aiming for profit.

Role of consumers in a capitalist economy

Consumers influence what goods and services are produced, leading to ongoing cycles of innovation and efficiency.

Positive effects of a capitalist economy

Economic growth, increased standard of living, freedom of choice, innovation, and competition.

Negative effects of a capitalist economy

Income inequality, environmental issues, potential exploitation of workers, reduced job security in competitive markets, and a lack of engagement.

Command economy

An economic system characterized by government ownership and central planning where the government decides what is produced, how it is produced, and who receives it.

Lack of competition in command economy

Absence of competition leads to a lack of incentives for individuals or businesses to improve performance or innovate.

Positive effects of a command economy

Guaranteed employment and prioritization of social welfare.

Negative effects of a command economy

Limits on entrepreneurship and individual economic freedom, reduced consumer choice, and decreased innovation.

Key difference in ownership between capitalist and command economies

Capitalist economies have private ownership of the means of production, while command economies have government ownership.

Decision-making in capitalist economy

Decisions are made by individuals and businesses based on market signals, with prices determined by the interaction of supply and demand.

Decision-making in command economy

The government makes all major economic decisions, including setting prices.