Chapter 2Chapter 2Economic Systems Economic Systems

and Decision Making, and Decision Making, part 2part 2

Chapter 2Chapter 2Economic Systems Economic Systems

and Decision Making, and Decision Making, part 2part 2

Americans share several major economic and social goals.

Economic Freedom – make own economic decisions

Economic Efficiency- wise use of factors of production

Economic Equity - justice, impartiality, and fairness - equal pay for equal work - minimum wage - truth in advertising - “lemon laws”

2-2: Evaluating Economic Performance

2-2: Evaluating Economic Performance

Economic Security– Unemployment compensation- Workman’s compensation- Social Security – disability and retirement insurance- Medicare – health insurance for persons 65 or older

Full Employment- Provide as many jobs as possible

Price Stability– Prevent inflation – rise in the general level of prices

Economic Growth- Enable people to have more foods and services- As population increases, economic growth is necessary to

meet everyone’s needs.Future Goals

Cleaner environment? Preservation of endanger species?

• How do we resolve conflicts between competing goals?– Trade-offs– Compare cost of goal to its benefits

– Economic Systems and the American Economy

Action: Place high tariff on import of foreign goods.

Goal:

Goal:

helps achieve

worksagainst

2-3: American Free Enterprise

Free enterprise – capitalist economy in which competition is allowed to flourish with a minimum of government

interference

Characteristics of Free Enterprise CapitalismEconomic FreedomPeople are free to choose their jobs, employers, and how to spend their money.

Voluntary ExchangeBuyers and sellers may

engage freely and willingly in market transactions.

Profit MotivePeople and organizations can

improve their material well-being by making money.

Private Property RightsPeople may control their possessions as they wish. Gives people incentive to work, save, & invest.

CompetitionProducers and sellers

compete with one another to attract

consumers.

Role of Entrepreneurs

Role of Consumers

Role of Government

•Organize land, capital and labor in order to seek profit

•Accept the risk of loss

•Decide HOW to produce

•Are innovators and catalysts

•Decide WHAT is produced by how they spend their money

•Spur development of new products by changing their wants

•As protector, provider and regulator, ensures and enforces that economic and social goals are being carried out

•Is a large consumer to the economy

???

Assignment• Read Chapters 1 and 2.• Do Chapter 1 and 2 Self Check

Quizzes from Student Resource Page and e-mail me the results.

• Review your Chapter 1 and 2 Notes.• Test Tomorrow over both chapters.• .