Chapter 3 Quiz Review Economics

This depicts how money flows throughout the economy. Circular Flow Model

Where final products are sold by firms to Households. Where households Sell the Factors of Production to firms

A federal health insurance program for senior citizens, regardless of income. Medicare

The act of buyers and sellers freely and willingly engaging in market transactions. Voluntary Exchange

These allow people to own and control their possessions as they wish. Private Property Rights

Here people and businesses carry on their economic affairs freely, but they are subject to some government intervention and regulation. Mixed Economy

The lowest legal wage that can be paid to most workers. Minimum Wage

The person who organizes and manages the land, capital, and labor in order to seek the reward called profit. Entrepreneurs

This started in December of 2007 and lasted until mid-2009 This started in December of 2007 and lasted until mid-2009. During this 18-month period, the nation’s Gross Domestic Product actually shrank about 4.5 to 5 percent! Great Recession

This recognizes the role of the consumer as sovereign, or ruler, of the market. The phrase “the customer is always right” reflects this power. Consumer Sovereignty

The energy for these is derived from renewable plant and animal materials, vegetable oils, and municipal and industrial wastes.  Biofuels

A federal program of disability and retirement benefits that covers most working people. Social Security

Resources are privately owned, and competition is allowed to flourish with a minimum of government interference. Free Enterprise

This does not increase over time, even though prices do. Fixed Income

The extent to which revenue from sales exceeds the full opportunity cost of the resources involved in producing the products sold.  Profit

The struggle among sellers to attract consumers with the best products at the lowest prices.  Competition

A rise in the general level of prices—occurs, workers need more money to pay for food, clothing, and shelter. Inflation

The incentive to improve material well-being—is largely responsible for the growth of a free enterprise system. Profit Motive

The market where households buy the products that firms sell. Product Market

The market where firms buy economic resources. Factor Market

Land, Labor, Capital, & Entrepreneurship. The Factors of Production Land, Labor, Capital, & Entrepreneurship.

They own and sell the Factors of Production. Households They own and sell the Factors of Production.

The Invisible Hand This describes the self-regulating nature of a free enterprise economy.

Efficiency, freedom, growth, and a wide variety of products. The advantages of a Free Enterprise Economy. Efficiency, freedom, growth, and a wide variety of products.

This makes an economy more efficient. Specialization This makes an economy more efficient.