C3 Econ Vocab

Economic freedom

The ability to make our own economic decisions without interference from the government.

Full employment

Exists when all who work can find jobs.

Economic equity

The fairness with which an economy distributes its resources and wealth.

Economic growth

An economy is said to grow when it produces more and better goods and services. Desirable because over time it leads to an improved standard of living.

Economic security

A society that puts a high value on ___ seeks to provide its less fortunate members with the support they need in terms of food, shelter, and health care to live decently.

Economic stability

Means that the goods and services we count on—electricity on demand, food, and clothing in store—are there when we want them.

Economic system

A society’s way of coordinating the production and consumption of goods and services.

Traditional economy

An economic system in which decisions about production and consumption are based on custom and tradition.

Command economy

An economic system in which decisions about production and consumption are made by a powerful ruler or government.

Market economy

An economic system in which economic decisions are left up to individuals producers and consumers.

Free market economy

The workings of the market are not planned or directed.

Circular flow model

Money comes in and goes out. This flow keeps the economy running. Economists use this to illustrate these interactions.

Household

Made up of a person or of a group of people living together.

Firm

An organization that uses factors to make and sell goods or services.

Product market

In which goods and services are sold by firms and purchased by households.

Factor market

In which households sell their land, labor, and capital to firms.

Factor payments

Income earned when an individual sells or rents a factor of production that he or she owns. Wages are ___ made to workers in exchange for their labor.

Industrial revolution

New inventions and manufacturing processes spurred the growth of society.

Capitalists

Individual investors grew wealthy by accumulating capital, including machinery, factories, railroads, and the like.

Capitalism

Came to be synonymous with the free market economic system.

Socialism

A political and economic philosophy that calls for property to be owned by society as a whole, rather than by individuals, for the equal benefit of all.

Communism

A political and economic system in which all property and wealth are owned by all members of society.

Economic planning

Done by government committees of economists, production experts, and political officials.

Mixed economy

An economic system in which both the government and individuals play important roles in production and consumption. Most modern economies are mixed economies.

Public works

Government-financed projects such as dams, highways, and sewer systems.

Transfer payments

A government collects taxes from both households and firms. They may use some of this money to transfer money back to households as payment for government benefits. Social security checks, welfare payments, and unemployment benefits are examples of ____.

Free enterprise system

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

Laissez-faire

A market economy that is relatively free of government interaction.

Contract

An agreement between a buyer and seller.

Property rights

The rights of those who own land, buildings, or other goods to use or dispose them as they choose.

Intellectual property

Creations of the minds that have commercial value.

Patent

Gives an inventor the sole right to make, use, or sell his or her invention for 20 years.

Copyright

Gives the creator of literary or artistic work the sole right to reproduce, distribute, perform, or display the copyrighted work.

Profit

The money earned by a business after subtracting its cost of operation.

Profit motive

The desire to make a profit.