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Economics - Topic 2
Eonomics - Topic 2 Vocabulary
| Term | Definition |
|---|---|
| innovation | the process of bringing new methods, products, or ideas into use |
| standard of living | level of economic prosperity |
| safety net | a set of government programs that protect people who face unfavorable economic conditions |
| economic system | the structure of methods and principles that a society uses to produce and distribute goods and services |
| traditional economy | an economic system that relies on habit, custom, or ritual to decide the three basic economic questions |
| market | any arrangement that allows buyers and sellers to exchange things |
| free market economy | an economic system in which decisions on the three key economic questions are based on voluntary exchange in markets |
| self-interest | an individual’s own personal gain |
| competition | the struggle among producers for the dollars of consumers |
| factor market | the arena of exchange in which firms purchase the factors of production from households |
| product market | the arena of exchange in which households purchase goods and services from firms |
| centrally planned economy | an economic system in which the government makes all decisions on the three key economic questions |
| command economy | another name for a centrally planned economy |
| socialism | a range of economic and political systems based on the belief that wealth should be distributed evenly throughout a society |
| communism | a political system in which the government owns and controls all resources and means of production and makes all economic decisions |
| authoritarian | describes a form of government that limits individual freedoms and requires strict obedience from its citizens |
| private property | property that is owned by individuals or companies, not by the government or the people as a whole |
| mixed economy | economic system that has some market-based elements and some level of government involvement |
| economic transition | a period of change in which a nation moves from one economic system to another |
| open opportunity | the principle that anyone can compete in the marketplace |
| interest group | a private organization that tries to persuade public officials to act in ways that benefit its members |
| profit motive | the incentive that drives individuals and business owners to improve their material well-being |
| macroeconomics | the study of economic behavior and decision-making in a nation’s whole economy |
| microeconomics | the study of economic behavior and decision-making in small units, such as households and firms |
| gross domestic product (GDP) | the total value of all final goods and services produced in a country in a given year |
| business cycle | a period of macroeconomic expansion, or growth, followed by a period of contraction, or decline |
| patent | a government license that gives the inventor of a new product the exclusive right to produce and sell it |
| copyright | a government license that grants an author exclusive rights to publish and sell creative works |
| public good | a shared good or service for which it would be inefficient or impractical to make consumers pay individually and to exclude those who did not pay |
| market failure | a situation in which the free market, operating on its own, does not distribute resources efficiently |
| public sector | the part of the economy that involves the transactions of the government |
| private sector | the part of the economy that involves the transactions of individuals and businesses |
| externality | an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume |
| welfare | government aid to the poor |
Created by:
brittlloyd
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