miller chapter 2 vocab

mixed economy

system based on a limited government involvement and role

centrally planned economy

system in which society’s leaders make all economic decisions

socialism

belief that democratic means should be used to distribute wealth evenly throughout society

communism

all economics and political power rests in the hands of the central government and is authoritarian

market

any place where people buy and sell goods and services

v amendment

protects rights of individuals and groups to own property

laissez faire

outlines that government should not intervene in the marketplace; “let them do as they please”

capitalism

economic system based on private ownership of the factors of production and paired with laissez faire

voluntary exchange

trade in which parties involved anticipate the benefits will outweigh the cost

profit

financial gain from business transactions

incentives

hope of reward or fear of punishment that makes people react in certain ways

competition

struggle among producers for consumer dollars

invisible hand

self-regulating nature of the marketplace

specialization

when each of us produces just one or a few products

free market

system based on voluntary exchanges in markets where individuals and businesses exchange money and products

factor market

interaction and exchange between firms and households

transaction

when a nation makes a move from one economical system to another

nationalize

to change from private ownership to government/public ownership

privatize

to change from government/public ownership to private ownership

global economy

all economic interactions that cross international boundaries