Economic Systems Economics Goals Articles Lecture Agenda Naked Economics Chapter 6 Review Economic Systems Economics Goals Articles Quiz … open note The US Economy Lecture Homework Review Powerpoint for next class (online) Read “Current Reading Assignment” online – The Moral Case for Capitalism (C:\Documents and Settings\SHaderlein\Desktop\summer 2012 articles\The Moral Case for Capitalism.mht) Test # 1 Period 2 – September 6 Period 6 – September 10 Period 7 – September 10 REMEMBER…Extra credit for the class if everyone attends test day!

Naked Economics, Chapter 6 Five minute review Writing Assignment to follow

No need to restate the question Naked Economics, Chapter 6 Writing Assignment What is a significant point of the chapter? What is an example of that point? What is an example of that significant point from our discussions? Bullet points are fine No need to restate the question Graphs are good

Economic Systems, Questions and Goals Societies organize themselves within different systems to allocate resources to produce goods and services to achieve economic goals 3 Economic Three Economics Systems Questions Free Mixed Centrally Planned Market Economy Economy What gets Consumers role Government Produced? for How it gets Producers Government Produced? individuals Who Income and Government Consumes? government 4

Continuum of Mixed Economies Centrally Planned to Free Market Source: 1999 Index of Economic Freedom, Bryan T. Johnson, Kim R. Holmes, and Melanie Kirkpatrick Iran North Korea Cuba China Russia Greece Peru United States South Africa France United Kingdom Botswana Canada Singapore Hong Kong 1999? What’s happened since with the US and with China since then? What has that achieved?

Quotes … The only freedom worth a damn is economic freedom. M.L. Meinken, author Hunger is the stuff of which dictators are made. Franklin Delano Roosevelt

Econ Cartoon!

Article What’s the real argument going on here? Freedom vs. Equity Inequity What’s the real argument going on here? More government involvement or less government involvement

Video…Economic Freedom http://live.wsj.com/video/the-index-of-economic-freedom/20D44B43-30D4-4945-B392-98639B76F804.html#!20D44B43-30D4-4945-B392-98639B76F804

Quiz Key Terms Economic Goals, Systems, and Questions

Quiz Key Terms Economic Goals, Systems, and Questions Cheat and you die

Quiz Key Terms Economic Goals, Systems, and Questions Cheat and you get a zero Remain Quiet 12

THREE MINUTE BREAK http://www.online-stopwatch.com/bomb-countdown/

Introduction to the US Economy

The US Economy What type of economic system is the US?

The US Economy What type of economic system is the US? Mixed Economy…some government and some individuals

Key terms Market Failure Public Goods Free Rider Transfer Payments Externalities

Key terms Market Failure Public Goods Free Rider The free market fails to provide the good or service desired by society…the “market failed” Example: A park Public Goods Government provided good or service (i.e. parks, libraries, roads, fire department). Solves the market failure Free Rider Uses the public good but did not pay the taxes for the public good

Key terms Transfer Payments Payments by the Government Can be cash or in kind (non-cash) payments Examples Cash Payments – Social Security, Unemployment benefits In Kind – Food stamps, healthcare 19

Why does the government provide Public Goods and Transfer Payments? Achieve Equity and Security CONNECTION?...Government does the Equity and Security Goals

Externalities Event that affects you but you had no control over it

but you had no control over it Externalities Event that affects you but you had no control over it Can be Positive or Negative not the same as “good” and “bad”

but you had no control over it Externalities Event that affects you but you had no control over it Can be Positive or Negative not the same as “good” and “bad” Examples New Park Hurricane

A couple questions…. 1. The United States economy is a mixed economy (a) based on the principle of a traditional economy, but allows some government intervention. (b) based on the principles of a centrally planned economy, with limited government intervention. (c) based on the principles of the free market, and allows no government intervention. (d) based on the principles of the free market, but allows some government intervention. 2. Government intervention in a modern economy is useful because (a) the needs and wants of modern society are always met by the marketplace. (b) the marketplace has many incentives to create public goods such as parks and libraries. (c) governments are able to provide some goods and services that the marketplace has no incentive to produce. (d) the marketplace provides all of its own laws.

Homework Print and Review Powerpoint for next class Read “Current Reading Assignment”

Test # 1 Key Terms Production Possibilities Curve Economic Goals, Systems, and Questions The US Economy Period 5 – January 29 Period 6 – January 29 Period 7 – January 30 REMEMBER…Extra credit for the class if everyone attends test day! REMEMBER…January 27 is Senior Service Day

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