Chapters 1 and 2 Test on Thursday (closed notes, etc) begin studying now.

There will be a FAFSA survey circulating around, please fill it before the end of class.

4 April 2011

Why are private property, specialization, voluntary exchange, the price system, market competition, and entrepreneurship considered the pillars of free enterprise?

How does the Circular Flow of Money, Resources, and Products model describe a free enterprise economy?

Discuss pgs. 13-15 in study guide. Tonight finish reading ch. 2 and complete

pg. 16 in the study guide.

Answer the following questions:

Resources flow from households to businesses through the resource market.

Products flow from businesses to households through the product market.

Households receive income from businesses (their cost) through the resource market.

Businesses receive revenue from households (their expenditures) through the product market.

Circular Flow

Economic definition of money: Anything accepted as payment for goods

and services

Functions of Money

-Medium of Exchange-Store of Value-Measure of Value

Medium of Exchange Trading money for a good or service EXAMPLE: I buy a TV for $700.

Store of Value

Saving money for future use Example: I put $700 under my mattress.

Goals of the U.S. Economic System

Arrange the following in order of importance:◦ Full employment◦ Economic growth◦ Price stability◦ Economic freedom◦ Economic security◦ Economic equity◦ Efficiency

See page 29!