Key features distinguishing market, command, and mixed economic systems. Front: the term or system. Back: a plain-language definition.
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- Market economy
- An economic system where prices determined by supply and demand direct production and consumption with minimal government intervention.
- Command economy
- An economic system where the government centrally plans and controls production, distribution, and consumption decisions.
- Mixed economy
- An economic system combining market mechanisms with government intervention to address market failures and provide public services.
- Capitalism
- An economic system based on private ownership of capital, free markets, profit incentives, and competition.
- Private property
- The right of individuals or businesses to own, use, and profit from assets and resources without government interference.
- Price mechanism
- The system by which prices rise and fall to signal scarcity or surplus, guiding production and consumption decisions.
- Supply and demand
- The economic principle that price tends toward a point where the quantity sellers want to provide equals the quantity buyers want to purchase.
- Profit motive
- The incentive to earn income or returns on investment, driving producers to meet consumer needs efficiently and innovate.
- Competition
- The contest between producers to attract customers through better products, prices, or service, encouraging efficiency and innovation.
- Consumer sovereignty
- The principle that consumer preferences, expressed through purchases, determine which goods are produced and how many.
- Invisible hand
- Adam Smith's concept that individuals pursuing their own self-interest in a competitive market unintentionally benefit the broader economy.
- Free market
- An economy where goods and services are exchanged based on supply and demand with little or no government interference.
- Laissez-faire
- A policy of minimal government intervention in economic affairs, allowing markets to self-regulate without rules or restrictions.
- Self-interest
- The economic motivation where individuals and businesses act to maximize their own benefit, driving production and trade.
- Central planning
- The process of a government agency deciding production levels, resource allocation, and distribution for the entire economy.