Untitled Flashcards Set

What is an economic system?

The rules and methods put in place by a society to answer the three fundamental economic questions: 'What to produce?', 'How to produce it?', and 'For whom to produce it?'

What is the subfield of economics that compares different types of economic organizations?

Comparative economic systems.

What are the four primary economic institutions?

Households, firms, markets, and government.

Who are considered the ultimate consumers in an economic system?

Households.

What is the role of firms in an economy?

Firms transform factors of production into finished goods/services.

What are economic resources or factors of production?

Inputs such as factories, farms, stores, trucks, and equipment used to produce goods and services.

What are natural assets in economics?

Natural resources including minerals, vegetation, water resources, topography, and agriculturally productive land.

What are produced assets?

Machinery, factories, inventories of finished goods, and social capital like infrastructure and educational institutions.

What is human capital?

The skills, education, and training that individuals in the labor force possess.

What is a market in economic terms?

The collection of all potential buyers and all potential sellers of a good or service.

What is the role of government in an economic system?

A decision-making institution with the legal authority to impose restrictions or mandates on the behavior of other decision-makers.

What is a contract?

A legal document specifying what different parties must do and providing enforcement for non-performance.

What defines capitalism?

An economic system in which the means of production are privately owned and operated for profit.

What defines socialism?

An economic system in which the means of production are owned by the government.

What is feudalism?

An economic system in which land ownership is restricted to an aristocratic nobility.

What are the three dimensions of Private Ownership of Property?

(i) Right to control, (ii) Right to transfer, (iii) Right to restitution.

What does the right to control mean?

The right to decide how to use your property.

What does the right to transfer mean?

The right to obtain or relinquish ownership of property to another person.

What does the right to restitution mean?

The right to be compensated when someone damages your property or infringes upon your rights.

What is consumer sovereignty?

The freedom for individuals to choose to purchase or not purchase goods/services at prices determined in a free market.

Who was Adam Smith?

An 18th-century Scottish economist known for his work 'An Inquiry into the Nature and Causes of the Wealth of Nations'.

What is the Invisible Hand?

Smith's concept that self-interested behavior in free markets leads to outcomes beneficial for all parties.

Who was Karl Marx?

A 19th-century German philosopher and economist known for 'Das Kapital' and 'The Communist Manifesto'.

What does the term Bourgeoisie refer to in Marxist theory?

Business owners.

What does the term Proletariat refer to in Marxist theory?

The working class.

What is communism?

An economic system in which means of production are collectively owned without government intervention.

What is the concept of the 'New Soviet Man'?

A person motivated primarily by selfless benevolence.

What is Economic Man?

A person who is self-interested and rational, as assumed in mainstream economics.

What is command planning?

An economic environment where the government directly controls most economic activity.

What is indicative planning?

An economic environment where the government guides individuals' economic decisions with policies.

What are the three primary types of economic incentives?

Material rewards, moral suasion, and coercion.

What are material rewards?

Monetary rewards or direct consumption increases from an activity.

What is moral suasion?

Efforts to convince individuals to act in a certain way because it's the right thing to do.

What is coercion in economics?

The use or threat of force to obtain compliance.

What is a mixed economy?

An economic system where most resources are privately owned and some are owned by the state.