The United States Economic System Topic 5 The United States Economic System

Why can we call it a “mixed” economic system? People & firms are mostly free, but we have government interference in economy

What is Everyone’s Role?

The Entrepreneur Organize & manage land, labor, & capital Search for profit Bring new products to market Increase competition Lower prices

Entrepreneur's Key to Success Expanding the market-advertising, international, target market Customer Service Customizing Product Adapting to new technology Efficient Production Uniqueness Reliability Affordable Good employee benefits - keeps them happy and working Specialization What characteristics of Free Enterprise do you see here? Explain how they relate.

The Consumer “Consumer sovereignty”: to vote with their dollars To say what is & isn’t produced

The Government To protect consumer: laws Provide goods & services: education, national defense, welfare Regulate: preserve competition Promote national goals: freedom, efficiency, growth, & stability

What is Free Enterprise? Firms are free to operate for profit w/o gov’t interference beyond necessary regulation to protect public interest

4 Characteristics of Free Enterprise Economic Freedom: both individuals & business take chances & risks Voluntary Exchange: freely & willingly engage in market transactions Private Property: people have the right & privilege to control possessions Profit motive: to risk savings on ventures in hopes of financial gain

Economic & Social Goals 1) Economic Freedom: make own decisions 2) Economic Efficiency: Not wasting the factors of production 3) Economic Equity: Equal pay for equal work; no discrimination

Economic & Social Goals (Continued) 4) Economic Security: protection against economic illnesses; layoffs, injury, (Social Security/Welfare/Medicare/etc.) 5) Full Employment: provide as many jobs as possible; Unemployment ONLY between 4% and 6% 6) Price Stability: gives certainty in prices; can expect inflation, protect fixed income individuals 7) Economic Growth: more $, more jobs, more goods