Key Concepts and Summary
Key Concepts and Summary
Societies can be organized as traditional, command, or market-oriented economies. Most societies are a mix. The last few decades have seen globalization evolve as a result of growth in commercial and financial networks that cross national borders, making businesses and workers from different economies increasingly interdependent.
Glossary
command economy
an economy where economic decisions are passed down from government authority and where resources are owned by the government
exports
products (goods and services) made domestically and sold abroad
globalization
the trend in which buying and selling in markets have increasingly crossed national borders
gross domestic product (GDP)
measure of the size of total production in an economy
imports
products (goods and services) made abroad and then sold domestically
market
interaction between potential buyers and sellers; a combination of demand and supply
market economy
an economy where economic decisions are decentralized, resources are owned by private individuals, and businesses supply goods and services based on demand
private enterprise
system where the means of production (resources and businesses) are owned and operated by private individuals or groups of private individuals
traditional economy
typically an agricultural economy where things are done the same as they have always been done
underground economy
a market where the buyers and sellers make transactions in violation of one or more government regulations
Review Questions
- What are the three ways that societies can organize themselves economically?
- What is globalization? How do you think it might have affected the economy over the past decade?
Critical Thinking Questions
- Why do you think that most modern countries’ economies are a mix of command and market types?
- Can you think of ways that globalization has helped you economically? Can you think of ways that it has not?
This lesson is part of:
Introduction to Economics