Warm Up Look at the picture of a space shuttle, a type of spacecraft. What do you think are the benefits and drawbacks of government involvement in the kind of enterprise shown here?

Wednesday, September 13, 2017 Objective:  Students will be able to compare the free enterprise system, socialism, and communism using the basic characteristics of economic systems. Purpose: Knowing how an economic system operates will help each of you perform certain roles effectively and how they impact others.

Disadvantages of Socialism Inefficiency Since the government fixes wages, workers lack the incentive to work faster or produce more No incentives to grow the economy (no rewards for innovation) Government officials and people in favored careers tend to enjoy higher incomes and access to a wider variety of higher- quality goods

Reasons for Mixed Economies some needs of modern society would be difficult to meet in the marketplace (building of highways, national defense) governments supply some needs in order to achieve the goal of equity and ensure that all members of society can benefit governments need to set rules so groups and individuals are not taken advantage of

Characteristics of a Mixed Economy Strong regulations and oversight Welfare system Regulations are in place to protect consumers Essential industries (healthcare, utilities, transportation) are owned by the government

This circular flow model shows how governments interact with households and businesses in a mixed economy. How does government affect the monetary flow in a mixed economy?

While almost all countries have mixed economic systems, some lean farther toward planned economies and others lean more toward free markets. How would you describe the location of the United States on this continuum?

Role of Our Government ensure that producers provide consumers with information that is honest and clear protect public health, safety, and well-being

The American Economy The American government keeps order, provides vital services, and promotes the general welfare The marketplace operates with a limited degree of government regulation and some limits government places on business use of private property

Federal regulations can affect many areas of a business Federal regulations can affect many areas of a business. Which government agency would a company that produces gasoline interact with regularly?

Role of Government in Our Economy Some Americans want greater regulation of employment practices to protect workers or of business processes to protect consumers or the environment Other Americans call for relaxation of existing regulations, arguing that government rules drive up the operating and administrative costs of businesses, making them less efficient and less competitive

Even in our free market, government places a number of restrictions on consumers. What is the purpose of government in each of these examples?

Summary Questions Why do mixed economies exist? What are some of examples of roles the government plays in the circular flow model? How is our economy an example of a mixed economy? What do the American people generally think about our mixed economy?