Agenda Naked Economics Chapter 6 Review

Economic Systems Economics Goals Articles

Quiz … open note The US Economy

Lecture Homework

Review Powerpoint for next class (online) Read “Current Reading Assignment” online – The Moral Case for

Capitalism (C:\Documents and Settings\SHaderlein\Desktop\summer 2012 articles\The Moral Case for Capitalism.mht)

Test # 1 Period 2 – September 6 Period 6 – September 10 Period 7 – September 10REMEMBER…Extra credit for the class if everyone attends test day!

Naked Economics, Chapter 6

Five minute review

Writing Assignment to follow

Naked Economics, Chapter 6 Writing Assignment

1. What is a significant point of the chapter?

2. What is an example of that point?

3. What is an example of that significant point from our discussions?

Bullet points are fineNo need to restate the question

Graphs are good

3 Economic Three Economics SystemsQuestions Free Mixed Centrally Planned

Market Economy EconomyWhat gets Consumers role GovernmentProduced?

forHow it gets Producers GovernmentProduced? individuals

Who Income and GovernmentConsumes?

government

Economic Systems, Questions and Goals

Societies organize themselves within different systems to allocate resources to produce goods and services to achieve economic goals

Continuum of Mixed EconomiesCentrally Planned to Free Market

Continuum of Mixed Economies

Centrally planned Free market

Source: 1999 Index of Economic Freedom, Bryan T. Johnson, Kim R. Holmes, and Melanie Kirkpatrick

Iran

North KoreaCuba

China

Russia Greece Peru United States

South Africa France United Kingdom

Botswana Canada Singapore

Hong Kong

1999? What’s happened since with the US and with China since then? What has that achieved?

Quotes …

The only freedom worth a damn is economic freedom.

M.L. Meinken, author

Hunger is the stuff of which dictators are made.

Franklin Delano Roosevelt

Econ Cartoon!

Article Freedom vs. Equity Inequity

What’s the real argument going on here?

More government involvement or less government involvement

Video…Economic Freedom

http://live.wsj.com/video/the-index-of-economic-freedom/20D44B43-30D4-4945-B392-98639B76F804.html#!20D44B43-30D4-4945-B392-98639B76F804

Quiz Key Terms Economic Goals, Systems, and Questions

Quiz Key Terms Economic Goals, Systems, and Questions Cheat and you die

Quiz Key Terms Economic Goals, Systems, and Questions Cheat and you get a zero Remain Quiet

THREE MINUTE BREAK

http://www.online-stopwatch.com/bomb-countdown/

Introduction to the US Economy

The US Economy

What type of economic system is the US?

The US Economy

What type of economic system is the US?

Mixed Economy…some government and some individuals

Key termso Market Failureo Public Goodso Free Rider o Transfer Paymentso Externalities

Key termso Market Failure

o The free market fails to provide the good or service desired by society…the “market failed”

o Example: A park

o Public Goodso Government provided good or service (i.e. parks, libraries,

roads, fire department).o Solves the market failure

o Free Ridero Uses the public good but did not pay the taxes for the public

good

Key termso Transfer Payments

o Payments by the Government o Can be cash or in kind (non-cash) payments

o Examples

o Cash Payments – Social Security, Unemployment benefits

o In Kind – Food stamps, healthcare

Why does the government provide Public Goods and Transfer Payments?

Achieve Equity and Security

CONNECTION?...Government does the Equity and Security Goals

Externalities

Event that affects you

but you had no control over it

Externalities

Event that affects you

but you had no control over it

Can be Positive or Negative

not the same as “good” and “bad”

ExternalitiesEvent that affects you but you had no control over it

Can be Positive or Negativenot the same as “good” and “bad”

Examples New Park Hurricane

A couple questions….1. The United States economy is a mixed economy

(a) based on the principle of a traditional economy, but allows some government intervention.

(b) based on the principles of a centrally planned economy, with limited government intervention.

(c) based on the principles of the free market, and allows no government intervention.(d) based on the principles of the free market, but allows some government

intervention.

2. Government intervention in a modern economy is useful because(a) the needs and wants of modern society are always met by the marketplace.(b) the marketplace has many incentives to create public goods such as parks and

libraries.(c) governments are able to provide some goods and services that the marketplace

has no incentive to produce.(d) the marketplace provides all of its own laws.

Homework Print and Review Powerpoint for next class Read “Current Reading Assignment”

Test # 1 Key Terms Production Possibilities Curve Economic Goals, Systems, and Questions The US Economy

Period 5 – January 29Period 6 – January 29 Period 7 – January 30

REMEMBER…Extra credit for the class if everyone attends test day!

REMEMBER…January 27 is Senior Service Day

HANDOUTS