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Cards In This Set
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What did self sufficiency not recognize in the past?
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The economic potential introduced by trade and specialization
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Why was there a fundamental change towards interdependence?
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To improve the 'standard of living' - providing your own food, clothing, and shetler was time-consuming and allowed little opportunity for developing/creating new methods, styles, sizes, etc.
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What are the responsibilities of an economic system?
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Make decisions and attend to: producing goods and services, managing resources, providing skills, distributing goods and services, developing new technology, and so on
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What are merit goods? What are some examples?
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Goods whose consumption creates very positive externalities (benefits) to society. As a result, governments often want everyone (regardless of income legel) to consume sufficient amounts of these goods. Examples: Basic education and basic healthcare
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What are demerit goods? What are some examples?
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Consumption of such goods creates very significant negative externalities on society so governemtns try to decrease or prohibit their consumption. Examples: Tobacco and alcohol are taxed by the government.
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What is a market?
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A process or an institution through which potential buyers and sellers of a product interact.
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What is a mixed economy?
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Refers to an economy in which economic decisions are determined by both market forces and the state.
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What is a private sector?
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This part of the economy includes households and firms/businesses.
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What is a public sector?
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This part of the ecoomy includes the state/government.
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What is resources allocation?
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The appointment of scarce resources to different uses for the production of different goods and services.
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What is infrastructure?
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Refers to the road system, the rail system, the harbours, airports, and telecommunications that a country has and which facilitate economic activity as they lower production and transaction costs.
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What are institutional factors?
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Refers to the laws adn regulations of product, labour, and capital markets in a country; more generally to the legal and regulatory framework within which economic activity is conducted.
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What are informal (parallel) markets?
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Markets in which economic activitiy is not officially reigstered, and therefore not accounted for and taxed.
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What is human capital?
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The education, training, and experience embodied in the laboru force of an economy.
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What are externalities?
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When an economic activitiy creates benefits or imposes costs for third parties for which these do not pay or do not get compnesated respsectively.
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