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Economics Study Guide 3 Economics Systems Traditional Economic System- An economics system that is based on customs and traditions. The focus is to produce and sell products in the same manner generation after generation. (Example would include the Amish society) Command Economic System- A system where the Government has control over the all aspects of the economy. (Example North Korea, Cuba) Free Market Economic System- A system where buyers and sellers through supply and demand determine economic outcomes with minimal government influence. ( Also known as a “Free Enterprise Economy”) Opposite Market Types Perfect Competition- A market type with a large number of firms and identical Products. There are no barriers to enter the market. (Examples include agricultural product like wheat, corn ect. Monopoly- A market type where a single firm is the entire market for the product. Monopolies have complete power over the price and quantity produced. Key Terms Federal Reserve Bank – The Central Bank of the United States of America. Census- A government count of the U.S population taken every 10 years Dow Jones Industrial Average- Represents 30 stocks in the New York Stock Exchange to monitor market price changes Bull Market- A stock Market where most prices are rising Karl Mark- Known as the Father of Communism. Economic philosopher who favored more government intervention in the economy Adam Smith- Economic philosopher who favored less government intervention in the economy. This “hands off’ approach to the economy is called Laissez-Faire. Wrote the book The Wealth of Nations GDP- Gross Domestic Product- Dollar value of all final goods and services produced in a country during a 1 year period. Inflation- A general rise in prices Consumer Price Index- CPI- Compares the prices of 90,000 goods for price changes over time to measure Inflation. Business Cycle Identify the Stages in the Business Cycle Expansion- GDP is rising Peak- GDP stops rising Recession- GDP is falling Trough- GDP stops falling