Chapter 2 I Vocab Inputs Factors of Production land labor capital entrepreneurship Outputs Goods and Services that consumers and others want to acquire Gross Domestic Product GDP is a measure of the size of the economy the total amount it produces in a year REAL GDP adjusts this measure for changes in the purchasing power of money that is it corrects for inflation Open Economy if it exports and imports constitute a large share of its GDP Closed Economy It its exports and imports constitute a small share of its GDP Markets Places where goods and services are bought and sold Transfer Payments Are sums of money that certain individuals receive as outright grants from the government rather than as payments for services rendered Progressive Tax If the ratio of taxes to income rises as income rises Mixed Economy is one with some public influence over the workings of free markets There is also some public ownership mixed in with private owenership II Role of the Government A Making and Enforcing the laws B Regulating Business C Providing certain Goods and Services 1 National Defense 2 Education 3 Social Services D Levying taxes to pay for theses G S E Redistributing income
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