1 Essential Question COPY: Describe each of the 5 key features of the U.S. Free Enterprise Economy, Identify the three actors and two markets in the circular flow model and describe what is exchanged between all three in BOTH markets. Features of the U.S. Economy SECTION 2

2 Free Enterprise (Copy): The U.S. economic system is a version of capitalism called Free Enterprise Free Enterprise has 5 main features or characteristics. Each feature enables U.S. citizens to have freedom to act in certain ways or to receive certain benefits that promote a healthy economy. SECTION 2 Features of the U.S. Economy

3 Instructions on Book work (COPY) For each of the five features of free enterprise: Identify the feature and give a BRIEF description of it, IN YOUR OWN WORDS explain why it is important (Describe what “life” would “look like” IF we DID NOT have this feature in our economy… What’s the opposite of the feature?)- Last provide an example of the feature in real life- you may use the book example if you need to. SECTION 2 Features of the U.S. Economy

4 Freedom to own private property/enter into contracts: Definition- All citizens have the right to own products. They may trade, keep, or destroy them. If they wish they can enter into a contract to exchange their p.p with someone else. Importance- If we didn’t have the right to own P.P; anyone could simply take our stuff (people or govt.) Or we would not be able to sell/trade our stuff with others (enter into contracts). Example - Phones, Cars, Houses, etc. SECTION 2 Features of the U.S. Economy

5 Freedom to make choices: (Person 1) Definition- All citizens have the freedom to choose how they satisfy their needs and wants. Importance- The ability to have choices about where we work, what we buy etc, gives us incentives to work hard and participate in our economy. Example Choosing where you work, what type of food you buy, what kind of car you drive, etc. SECTION 2 Features of the U.S. Economy

6 Freedom to engage in competition: (Person 2) Definition- Businesses are free to choose what, how, and for who to produce, EVEN if they are similar to another business; this rivalry is called competition Importance By allowing businesses to compete, consumers get a wide variety of products to choose from at reasonable prices. Example Apple vs. Samsung; McDonalds vs. Burger King SECTION 2 Features of the U.S. Economy

7 Freedom to act in Self-Interest: (Person 3) Definition The ability to do things that benefit you EVEN if they may not be beneficial to others Importance This allows people to take care of themselves, without putting the needs of others before themselves. Can be a problem if people behave selfishly or greedily. Example SECTION 2 Features of the U.S. Economy

8 Limited Government Involvement: (Person 4) Definition Importance Example SECTION 2 Features of the U.S. Economy

9 Two markets of the circular-flow model (COPY): product market- on this market finished products and money payments are exchanged between individuals, businesses, and government. resource market- in this market resources are provided and consumed to make products in exchange for money payments between individuals, businesses, and government. SECTION 2 Features of the U.S. Economy

10 Two markets of the circular-flow model: (Cont.) Draw a Sketch of the Diagram on page 34 in your text book. Be sure to label it correctly and completely SECTION 2 Features of the U.S. Economy