Economic Systems Compared Flashcards
Grade 9 · Social Studies · Flashcards
Key vocabulary, concepts, thinkers, and comparisons related to capitalism, socialism, communism, and mixed economies.
Flashcards
- Capitalism
- Economic system with private ownership of means of production, free markets setting prices through supply and demand, and the profit motive driving economic activity.
- Socialism
- Economic system where means of production are collectively or state-owned, with redistribution of wealth and strong social programs to reduce inequality.
- Communism
- Radical economic/political system (theorized by Marx) calling for collective ownership of all production, abolition of private property, and an eventual classless, stateless society.
- Mixed Economy
- An economy combining private enterprise with government intervention and public services; all modern market economies are mixed to varying degrees.
- Social Democracy
- A political philosophy combining regulated free-market capitalism with robust welfare programs (universal healthcare, education); practiced by Nordic countries like Sweden, Denmark, Finland.
- Central Planning
- Government control of all major economic decisions — what is produced, how, at what price; characteristic of command economies; prone to inefficiency and shortages.
- Adam Smith
- Scottish economist (1723–1790) considered the father of modern capitalism; his 'Wealth of Nations' (1776) described free markets, the division of labor, and the 'invisible hand.'
- Karl Marx
- German philosopher/economist (1818–1883) who critiqued capitalism as exploitative, theorized class struggle, and called for a workers' revolution leading to communism; co-wrote 'The Communist Manifesto' (1848).
- John Maynard Keynes
- British economist (1883–1946) who argued that government spending can stimulate a struggling economy during recessions; his ideas underpin modern mixed-economy policy.
- Market Failure
- When free markets fail to allocate resources efficiently; causes include monopolies, externalities (pollution), and public goods that markets under-provide.
- Means of Production
- Resources used to produce goods: factories, machinery, land, raw materials, and capital. Who controls them is the fundamental dividing line between economic systems.
- Gini Coefficient
- A statistical measure of income or wealth inequality within a nation, ranging from 0 (perfect equality) to 1 (total inequality); higher scores indicate more unequal societies.
- Three Fundamental Economic Questions
- Every economic system must answer: (1) What goods and services should be produced? (2) How should they be produced? (3) For whom should they be produced?
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