Chapter 3: Economic Systems — Vocabulary Flashcards

Vocabulary flashcards covering key terms and concepts from the lecture notes on economic systems (capitalism vs socialism, market vs government, and the continuum of economic systems).

Economic System

The system of rules, laws, and methods a society uses to answer the three fundamental economic questions.

Three Fundamental Economic Questions

What to Produce? How to Produce It? For Whom are the Goods Produced?

Means of Production

Resources used to produce goods and services; also called the factors of production (land, labor, capital).

Private Ownership

Ownership of the means of production by individuals or firms, not the government.

Public Ownership

Ownership or control of the means of production by the government or the public.

Capitalism

An economic system based on private ownership of the factors or means of production.

Socialism

An economic system based on government or public ownership or control of the means of production.

Market

The collection of buyers and sellers of a good who interact voluntarily with each other.

Government (in economics)

The decision-making unit with the exclusive right to use coercion or non-voluntary means in interactions among members of society.

Centrally Planned System

A synonym for socialism; a system where the government plans and controls production and allocation.

Command System

A synonym for socialism; a system in which economic activity is directed by the government.

Free-Market System

A synonym for capitalism; a market-based system with minimal government intervention.

Mixed Economic Systems

Economic systems that blend elements of both socialism and capitalism.

Pure Socialism

An ideal end-state on the spectrum with predominant socialist characteristics and public ownership.

Pure Capitalism

An ideal end-state on the spectrum with predominant capitalist characteristics and private ownership.

Economic Systems as a Continuum

The idea that economic systems exist on a spectrum from pure socialism to pure capitalism, with mixed systems in between.