Types of Systems (Economics and Science, Technology and Society)

Invisible Hand

the theory that the economy is not led by an entity, but is the result of individuals acting in their own self-interests

Globalization

when countries and people become more connected and share things like goods, ideas, and cultures worldwide, often because of technology and improved communication

Purchasing Power

the ability to buy goods

John Maynard Keynes

British economist of the early 20th century; he is best known for his contributions to macroeconomics, and particularly for his belief that governments could influence economic performance through changes in aggregate spending

Pure Competition (or Perfect Competition)

market where products are almost exactly the same and there are infinite competitors Example. market for mortgage: multiple sellers are offering essentially the same good (money) to a buyer.

Retaliatory Tariff

when Country A places a tariff on Country B’s imports because Country B placed a tariff on Country A’s imports

Monopolistic Competition

A market where many firms are present and the distinction of the products results in increased prices that drives innovation

Friedrich Engels

a German economic and political philosopher and a prominent critic of capitalism who, together with Karl Marx, authored The Communist Manifesto

Communism

A political theory and economic system in which all property is publicly owned and each person works and is paid according to their abilities and needs. (vietnam)

Capitalism

An economic system characterized by private, rather than government, ownership of industry. Prices, production, and distribution of goods are determined by competition in a free market.

Tariff

a tax placed on a specific type of imported or exported good. The United States has a tariff on imported Steel to help protect American Steel Manufacturers from foreign producers

Balance of Trade

the difference between a nation's net exports and imports over a given time period

Monopoly

market where one firm controls the price, production, and supply of a good. Until 1982, AT&T managed ALL phone service in the United States

Keynesian Economics

free markets can lead to economic inefficiencies and governmental intervention can lead to a stable, productive economy. Governments can stimulate the economy by reducing interest rates and investing in infrastructure.

Adam Smith

The father of capitalism. Wrote "An Inquiry into the Nature and Causes of the Wealth of Nations." Argued that an invisible hand guides the economy to its greatest productivity.

Market

a space in which goods are exchanged

Trade

the exchange of products for money between entities

Trade Cap

A limit to the amount of a good that can be imported or exported

Karl Marx

theorist known for writing The Communist Manifesto and advocating for the overthrow of capitalist governments in favor of a classless society

Oligopoly

A market where only a few sellers are present. the mail market with limited options to choose from:USPS, UPS, FedEx

Wage

Compensation, usually monetary, paid by an employer to their employee in return for work done.

Voluntary Exchange

Goods are produced and consumed without government intervention

Trade Deficit

buying more than they are selling

Specialization of Labor / Division of Labor

A tendency for groups to focus and work on (specialize) wherever they can make the best product at the highest revenue (comparative advantage) and use trade to acquire other products

Socialism

an economic system in which the means of production are owned by the people, represented by the government. The government often also provides many social services to the population to achieve equality. (Soviet Union)

Trade Surplus

when a nation a exports a greater value of goods than it imports

Depreciation

a decrease in currency value

Interdependence of Economies

all economies require each other to function Example.The technology of a smartphone may be produced in a different country than the physical parts.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another entity

Market Economy

An economic system where decisions about production, consumption and investment are guided by the price of goods and services, which are determined by the laws of supply and demand. (Capitalism)

North American Free Trade Agreement (NAFTA)

A trade agreement that created a free trade zone between the US, Canada, and Mexico

Appreciation

an increase in currency value

Absolute Advantage

The ability of an entity to produce more of a good or service than another entity using the same amount of resources.

Specialization

A tendency for groups to focus and work on (specialize) wherever they can make the best product at the highest revenue (comparative advantage) and use trade to acquire other products

Subsidies

Government payments to an industry to reduce costs or create false demand Example. Farm subsidies in the US

Private Property

anything owned by the individual

Free Trade

the ability for one country to trade with another without hindrance so that all goods can be produced with the greatest efficiency

OPEC (Organization of the Petroleum Exporting Countries)

An international organization of countries that produce the majority of the world's oil supply. Current member states range in location from South America to central Africa with the majority of member states located in the Middle East.

Trade Barriers

obstacles to trade Example. Government regulations

Price Controls

A maximum price set by the government allowed to be charged for a particular good