Chapter 2 Summary Economic Systems and the Global Economy Victoria Patterson
Eric GroveMr. Treadway |Period 3
Overview Brief overview of the chapter
Key Terms
economic system: How society decides what goods to produce, how to produce, and for whom the goods are produced.
free enterprise: Economy in which individuals own most, if not all resources and control their use.
socialism: Government run economy in which the government controls and owns many resources. Extremist socialism is Communism. example: China, Soviet Union
economic plan: Government specified economic activities such as as goods produced and what prices are charged.
income distribution: How income is earned in a country is divided among different groups of income earners.
mixed economy: Economy that is neither fully capitalist or fully socialist
an economy that uses elements from both. example United States is a mixed economy.
traditional economy: An economic system in which the answers to the three economic questions are based on customs, traditions, and cultural beliefs.
vision: A sense of how the world works.
labor theory of value: The belief that all value in produced goods is derived from labor. The more labor that was put into producing the good, the more valuable the good is.
surplus value: The difference between the total value of production and the subsistence wages paid to workers.
globalization: A phenonmenon by which economic agents in any given part of the world are affected by events elsewhere in the world; the growing integration of the national economies of the world to the degree that we may be witnessing the emergence and operation of a single worldwide economy.
offshoring: The term used to describe work done for a company by people other than the original company's employees in a country other than the one in which the company is located. Often due to cheaper wages.
Comprehension/Critical Thinking and Writing
1. How does socialism and capitalism answer the three economic questions? Is America a pure capitalist nation? Is this good or bad? Explain.
What goods and services should be produced, how should the goods and services be produced, and for whom should these goods and services be produced.
2. Describe the Kaynesian School of Economics and the impact it has had on American economic policy.
Eric GroveMr. Treadway |Period 3
Overview Brief overview of the chapter
Key Terms
economic system: How society decides what goods to produce, how to produce, and for whom the goods are produced.
free enterprise: Economy in which individuals own most, if not all resources and control their use.
socialism: Government run economy in which the government controls and owns many resources. Extremist socialism is Communism. example: China, Soviet Union
economic plan: Government specified economic activities such as as goods produced and what prices are charged.
income distribution: How income is earned in a country is divided among different groups of income earners.
mixed economy: Economy that is neither fully capitalist or fully socialist
an economy that uses elements from both. example United States is a mixed economy.
traditional economy: An economic system in which the answers to the three economic questions are based on customs, traditions, and cultural beliefs.
vision: A sense of how the world works.
labor theory of value: The belief that all value in produced goods is derived from labor. The more labor that was put into producing the good, the more valuable the good is.
surplus value: The difference between the total value of production and the subsistence wages paid to workers.
globalization: A phenonmenon by which economic agents in any given part of the world are affected by events elsewhere in the world; the growing integration of the national economies of the world to the degree that we may be witnessing the emergence and operation of a single worldwide economy.
offshoring: The term used to describe work done for a company by people other than the original company's employees in a country other than the one in which the company is located. Often due to cheaper wages.
Comprehension/Critical Thinking and Writing
1. How does socialism and capitalism answer the three economic questions? Is America a pure capitalist nation? Is this good or bad? Explain.
What goods and services should be produced, how should the goods and services be produced, and for whom should these goods and services be produced.
2. Describe the Kaynesian School of Economics and the impact it has had on American economic policy.
