Foundations of government Lesson 3 shaniya tucker pd.

Economics: the study of how people and nations use their limited resources to attempt to satisfy wants
and needs

Regulation: rule or procedure that has the force of law

Capitalism: an economic system in which private citizens own and use the factors of production in order
to generate profits

Consumers: people who purchase and use goods and services

free market: economic system in which buyers and sellers make free choices in the marketplace

free enterprise: the opportunity to control one’s own economic decisions

laissez-faire: the philosophy that government should keep its hands off the economy

mixed economy: a system in which the government regulates private enterprise

socialism: an economic system in which the government owns the basic means of production,
distributes the products and wages, and provides social services such as health care and welfare

democratic socialist: a socialist who is committed to democracy but wants government involvement in
the distribution of wealth

command economy: an economic system in which the government controls the factors of production

bourgeoisie: capitalists who own the means of production

proletariat: workers who produce the goods

communism: an economic system in which the factors of production are collectively owned and the
central government directs all major economic decisions

3. Listing What are the basic factors of every economy?

Producers, Distributors, Consumers, Labor, Resources, Capital, and Entrepreneurs

4. Describing What are the goals of capitalism?

The goal of capitalism is to create what is called a free market. In economic terms, a market is not
literally just a market like a grocery store. A market or marketplace is wherever all sorts of goods and
services can be sold and bought. In a free market or free enterprise economy like that under capitalism,
government places no limits on the freedom of buyers and sellers to make their economic decisions.

5. Defining What are mixed economies?

Mixed economies combine elements of capitalism and socialism. Mexico is another example of a mixed
economy. While primarily capitalistic, the government owns all natural resources and runs a giant oil
company, Petrolero Mexicanos (PEMEX).

6. Describing What are the goals of socialism?

Socialism is an economic system in which the government plays a significant role in the economy, but it
does not completely control it. It owns most land, basic industries, and other means of production.
Under socialism, government planners determine the use of resources and distribute the products and
wages. The government also provides extensive social services such as education, health care, and
welfare for its people. The goal of socialism is an equal distribution of wealth.

7. Explaining How does a command economy work?

In communist nations, the government decides how much to produce, what to produce, and how to
distribute the goods and services produced. This system is called a command economy because
decisions are made at the upper levels of government and handed down to the rest of the nation.