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FrontPage: Get ready for your quiz.
Last Word: Chapter 2 Section Review due Friday
Every Super Bowl Football Ever In One GIF
Chapter 2:Chapter 2:Economic Systems andEconomic Systems andthe American Economythe American Economy
Introduction
•You probably have set some goals in your life, such as going to college, learning a trade, or opening a business.
• If you were to compare your personal goals to the goals of a North Korean teenager, the lists might vary widely.
•One of the reasons for this variance is that each of these persons lives in a community or nation with a different economic system, or way of determining how to use resources to satisfy people’s wants and needs.
Three Basic Questions
• What goods and services should be produced?
• How should they be produced?
• Who will get the goods and how will they be distributed?
Types of Economic Systems
Types of Economic Systems
• A traditional economy is based on customs and beliefs passed down for generations.
• A command economy is when government leaders answer the three basic questions.
Types of Economic Systems
• A market/capitalist economy is when individuals make the decisions.
• A mixed economy is a combo of market and command (private ownership of property and individual decision making are combined with govt. regulations).
6 Characteristics of the American Economy
6 Characteristics of the American Economy
• Adam Smith “Father of Capitalism” described an economic system called capitalism.
• Pure capitalism can be referred to as a laissez-faire system, or a system where people and businesses make economic decisions without government constraints.
• Smith’s ideas influenced the United States’ basic economic system.
Limited Role of Government
• A market economy offers a freedom of choice.
• A seller can choose to make or not make a product, and you can choose to buy it or not.
Freedom of Enterprise
6 Characteristics of the American Economy
• People can basically buy what they want.
• Demand will determine what is produced.
• Government sets safety standards.
• Government regulates price in some industries.
Freedom of Choice
6 Characteristics of the American Economy
• People produce goods to make a profit, or money left after costs of production are paid.
• The desire to make money is called profit incentive.
• There is also a risk of losing money.
Profit Incentive
6 Characteristics of the American Economy
• Private property is property held by individuals or groups rather than the federal, state, or local government.
• Individuals control how property is used.
• Private property is protected by the United States Constitution.
Private Property
6 Characteristics of the American Economy
• Different people can produce similar products and services.
• Competing businesses try to win customers with lower prices or better quality goods and services.
• Businesses need to use resources efficiently to stay competitive.
Competition
6 Characteristics of the American Economy
• In the United States, most industries allow anyone to start a new business.
Competition
6 Characteristics of the American Economy
Goals of Our Nation
Goals of Our Nation
• Nations have values, and they set goals for themselves based on those values.
• The United States is no exception.
• Its goals are evident in the supreme law of the land—the Constitution—as well as in its government policies and in the actions of people like you.
Goals of Our Nation
• Economic Freedom: to allow individuals to make choices
• Economic Efficiency: to use limited resources wisely
• Economic Equity: to exhibit fairness—protected by laws
• Economic Security: to provide protection for risks we cannot control
Goals of Our Nation
•Economic Stability: to reach a stable economy
•Economic Growth: to grow and expand the economy
•Trade-Offs Among Goals: achieving national goals require trade-offs.
Rights and Responsibilities
• People have the right to do what they want within the law.
• People have to behave responsibly in order for the system to work.
• People are responsible for understanding how government policies affect the economy and to cast their votes accordingly.
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