What is the study of economics focused on?
Ways in which money is created and used in society
Economics examines the production, distribution, and consumption of goods and services.
Define gift economy.
A system of trading or giving without immediate payback
In a gift economy, goods and services are given freely without the expectation of a return.
List the characteristics of market economies.
- Economic freedom
- Competition
- Economic incentives
- Limited government influence
- Private ownership
These characteristics help determine the prices of goods and services through a free system.
What does economic freedom allow individuals and businesses to do?
Manage on their own and make their own choices
Economic freedom is essential for personal and business decision-making.
How does competition affect businesses and consumers?
Gives more variety and choices, forces lower prices
Competition encourages businesses to improve their offerings to attract customers.
What are economic incentives?
Results of competition that force businesses to do their best for customers
Economic incentives drive businesses to improve quality and service.
What is meant by limited government influence in a market economy?
Freedom without oversight to do what’s good for individuals or businesses
This allows businesses to operate with minimal regulation.
Define private ownership.
Ability to make and market their own business without government influence
Private ownership allows businesses to create profit without needing to pay taxes.
What is a pure market economy characterized by?
Very laissez faire with little government influence
This means no taxes, tariffs, and other regulations.
What is the relationship between supply and demand?
Determines the prices and availability of goods and services
Supply and demand are fundamental concepts in economics.
What are the drawbacks of market economies?
- Large divisions between rich and poor
- Natural resource consumption without regulation
These drawbacks can lead to social and environmental issues.
What is a planned economy?
An economy where the government plays a central role
Planned economies contrast with traditional market economies.
What are mixed economies?
Economies that are somewhere between laissez faire and planned economies
Mixed economies combine elements of both market and planned systems.
Define capitalism.
A system of privately owned businesses making profit
Capitalism relies on private ownership and market competition.
What are the three things needed for capitalism?
- Capital: goods and tools used to make products
- Resources: natural occurring things needed to create products
- Labor: human ability to produce goods and services
These elements are essential for production in a capitalist system.
What is minimum wage?
A minimum amount of money the company is allowed to pay their employees
Minimum wage laws are designed to protect workers from exploitation.
List factors that influence how much a company will pay employees.
- Cost of living
- Education and training
- Skill
- Experience
- Job performance
- Supply and demand
- Crisis
These factors can vary widely depending on the job market and economic conditions.
True or false: America is considered a pure market economy.
FALSE
America has elements of capitalism but is not a completely pure market economy.
What is global trade?
Transportation of global goods and services across international borders
Global trade involves the exchange of resources and money between countries.
What are tariffs?
Taxes applied specifically to imports and exports
Tariffs are a form of regulation that can affect international trade.
