Gov

Producers

People who make goods and services to sell

Distributors

People who get products to buyers

Consumers

People who purchase and use goods and services

Labor

The work that people do or the workers themselves

Resources

Natural materials like land, water, and human knowledge needed for production

Capital

Money or resources needed to purchase or invest in production

Entrepreneurs

Risk-taking individuals who combine factors of production for profits

Three key economic questions

What to produce, how to produce, who gets the goods

Traditional economy

Economic decisions based on customs, agriculture, barter

Market economy

Economic system with private ownership and competition

Command economy

Economic system where government controls production and distribution

Capitalism

Economic system with private ownership, freedom of choice, and profits

Socialism

Economic system with public ownership and social welfare

Communism

Economic system with collective ownership and no social classes

Mixed economy

Combines elements of capitalism and socialism

Laissez-faire

Hands-off approach to economy, letting market forces guide

Free market

Economic system with no government restrictions on buyers and sellers

Adam Smith

Scottish economist advocating laissez-faire and free trade

Competition in capitalism

Sellers compete for resources, consumers for products and workers for wages

Five characteristics of pure capitalism

Private ownership, free enterprise, competition, freedom of choice, possibility of profits

Mixed economies

Combine elements of capitalism and socialism, like the U.S. and Mexico

Government regulation in the U.S.

Increased role since early 1900s in buying, regulating industries, and creating programs

Meat Inspection Act and Pure Food and Drug Act

Regulations passed in early 1900s to address health and safety concerns

Social Security system

Program created during the Great Depression to provide economic security

Tennessee Valley Authority

Public corporation established during the Great Depression to provide electricity

Pure Capitalism

Economic system without government regulation, unlike the U.S.

Goals of Socialism

Equal distribution of wealth, government ownership of key industries.

Early Socialism

Originated in the 1800s to address industrialization's negative impact on workers.

Democratic Socialism

System combining democracy with government involvement in wealth distribution.

Command Economy

Economic system where the government controls production and distribution.

Karl Marx

German philosopher who laid the foundation for communist theories.

Bourgeoisie

Capitalists who own means of production in Marxist theory.

Proletariat

Workers who produce goods in Marxist theory.

Cold War

Period of political tension between communist and capitalist nations.

North Korea

Example of a communist state with strict government control over the economy.

Five-Year Plans

Used by communist governments to set production goals and control the economy.