America’s Economic System

America’s Economic System

What are the benefits of America’s free economic

system?What role does government

play in the American economic system?

What are the benefits of America’s free economic

system?What role does government

play in the American economic system?

What is the American economic system?

What is the American economic system?

The US is a “free enterprise” economy What is free

enterprise?

Individuals control a society’s resources Limited government

involvement

The US is a “free enterprise” economy What is free

enterprise?

Individuals control a society’s resources Limited government

involvement

Command Economy Free

Enterprise Economy

Mixed Economy

USA

What are the basic principles behind a “free enterprise”

economy?

What are the basic principles behind a “free enterprise”

economy? Three (3) basic ideas:

Right to choice Right to produce what

you like Right to turn a max.

profit

Many of this basic ideas have influenced economies around the world today

Three (3) basic ideas: Right to choice Right to produce what

you like Right to turn a max.

profit

Many of this basic ideas have influenced economies around the world today

What freedoms does the American economic system offer

its citizens?

What freedoms does the American economic system offer

its citizens? Five (5) major

freedoms: Right to private

property Open Opportunity Legal equality Free contracts Profit motivation

Five (5) major freedoms: Right to private

property Open Opportunity Legal equality Free contracts Profit motivation

Right to Private PropertyRight to Private Property

“Free Enterprise” allows individuals to own their own property / materials Land Natural

Resources Ideas

“Free Enterprise” allows individuals to own their own property / materials Land Natural

Resources Ideas

Pennsylvania & Natural Gas

Pennsylvania & Natural Gas

Open OpportunityOpen Opportunity

Anyone can take part / or not take part in the economy Freedom of choice

Creates variety for citizens Forces all business

to be productive

Anyone can take part / or not take part in the economy Freedom of choice

Creates variety for citizens Forces all business

to be productive

Fast FoodFast Food

Gas StationsGas Stations

SupermarketsSupermarkets

Legal EqualityLegal Equality

Everyone is protected by the same economic rights in the economy Right to succeed Right to fail

Everyone is protected by the same economic rights in the economy Right to succeed Right to fail

Free ContractsFree Contracts

People have a choice when it comes to entering agreements in the marketplace Mortgages Credit Cards Checking

Accounts

People have a choice when it comes to entering agreements in the marketplace Mortgages Credit Cards Checking

Accounts

Profit MotivationProfit Motivation

Encouraging people to improve themselves through economic activity

MAKE $$$$$$$ Encourages

competition

Encouraging people to improve themselves through economic activity

MAKE $$$$$$$ Encourages

competition

It’s All About the Benjamins, baby….

It’s All About the Benjamins, baby….

How does “free enterprise” effectively eliminate

scarcity?

How does “free enterprise” effectively eliminate

scarcity? Consumers have the

freedom to look for the best deals out there “Most bang for their

bucks”

This tells entrepreneurs what a society wants Effectively divides

resources

Consumers have the freedom to look for the best deals out there “Most bang for their

bucks”

This tells entrepreneurs what a society wants Effectively divides

resources

What is the role of the US government in a “free enterpris

e” economy?

What is the role of the US government in a “free enterpris

e” economy? In theory,

government has a limited role in “free enterprise”

However, government still needs money to operate Has bills to pay Debts to re-pay

In theory, government has a limited role in “free enterprise”

However, government still needs money to operate Has bills to pay Debts to re-pay

What is the role of the US government in a modified “free

enterprise” economy”?

What is the role of the US government in a modified “free

enterprise” economy”? Under a “modified”

free enterprise economy: Tax Spend Invest Borrow money

Government becomes an active participant in the economy

Under a “modified” free enterprise economy: Tax Spend Invest Borrow money

Government becomes an active participant in the economy

Adam Smith’s “Invisible Hand”

Adam Smith’s “Invisible Hand”

The American government “hand”

The American government “hand”

What are the benefits of a modified “free enterprise”

economy?

What are the benefits of a modified “free enterprise”

economy? Government can

use its money / power to try and provide the most good Subsidies projects Regulate industries Protect workers Provide

unemployment

Government can use its money / power to try and provide the most good Subsidies projects Regulate industries Protect workers Provide

unemployment

Federal subsidiesFederal subsidies

Regulating IndustriesRegulating Industries

Protecting workersProtecting workers

Providing UnemploymentProviding Unemployment

What are the drawbacks to a modified “free enterprise”

economy?

What are the drawbacks to a modified “free enterprise”

economy? Just like any

businessman, government has the freedom to FAIL Over-charge Mismanage Bad investments Debt

Just like any businessman, government has the freedom to FAIL Over-charge Mismanage Bad investments Debt

The National Debt ClockThe National Debt Clock