Objective 2.04 Understand the United States’ economic system. 2.04 U.S. Economy Objective 2.04 Understand the United States’ economic system.

Mixed Economy A combination of a free enterprise (or market) and a command economy. Privately owned businesses and government both play important roles. The marketplace produces: cars health care technology food (with some government regulations) The government provides: defense education

United States’ Mixed Economy Free Enterprise/Market Economy

Market Economy Characteristics Private property ownership. Freedom of enterprise and Choice Motive of self-interest Competition System of markets and prices The market addresses consumer wants

Market Economy Advantages Individuals can own businesses and resources Individuals can buy and sell goods and services Competition in the market leads to greater choices Consumers play a great role in the economy

Market economy Disadvantage The critical role of the consumer in the market can create a tremendous divide between the poor and the wealthy

United States’ Mixed Economy Command Economy

Limited Government The government helps protect people by being a body that monitors public safety through regulatory agencies such as: Food & Drug Administration (FDA) Occupational Safety and Health Administration (OSHA)

The government provides some services to take care of people’s needs Highways--roads and other transportation services Schools and other public education services Social Security Medicare Defense and public safety

Command Economy Advantages Consumers have some protection in the marketplace Essential services are provided for citizens

Command Economy Disadvantages Citizens have to pay taxes so the government can provide services Some think there is too much government control in the marketplace

United States’ Economy Summary Government has a minimal role in the domestic economy. Business firms in the U.S. have much less regulation than those in many other nations. Largest national economy in the world A mixed economy Corporations and other private firms make the majority of microeconomic decisions.