The U.S. Economy EQ: How does a market economy protect consumers? (Turn in Green Book to page 248)

Four Types of Economies  1. _____________ : all economic decisions are made by the government.  2. _____________ : based on the economic decisions of the past.  3. _____________ : some economic decisions are made by government and some by individuals.  4. _____________ : all economic decisions are made by individual producers & consumers

Free Enterprise  AKA-- ________________  Called Free Enterprise because each person is free to _______________.

Key Components of Free Enterprise & a Market Economy  Define each and give 1 example why it is so important: Private Property Private Property Voluntary Exchange Voluntary Exchange Full Employment Full Employment Productivity/Efficiency Productivity/Efficiency Division of Labor/Specialization Division of Labor/Specialization Equity/Securities Equity/Securities  Test Practice page 253, #1-3

Circular Flow Model of Our Economy

Circular Flow Dynamics  How does the Circular Flow illustrate Economic Interdependence?  What takes place in the Factor Market?  What takes place in the Product Market?  Test Practice page 257, #1,2,3

Economic Interdependence  Using the Circular Flow Model, create a scenario that could actually happen in real-world and specifically show how it would affect each sector of our economy.

Law of Demand  When _________ go up, __________ goes down.  When _________ go down, _________ goes up.  Demand is the amount of a good/service consumers are wanting or needing to buy.

Law of Supply  When _________ go up, __________ goes up.  When _________ go down, _________ goes down.  Supply is the amount of a good/service producers are willing to produce.

Complimentary Goods  Products that go together.  Name a complimentary good for each Mayonnaise Mayonnaise Pepsi Pepsi Paper Plates Paper Plates Flatscreen Plasma TV Flatscreen Plasma TV

Substitute Goods  Products that are basically the same.  Name a substitute good for each Mayonnaise Mayonnaise Pepsi Pepsi Paper Plates Paper Plates Flatscreen Plasma TV Flatscreen Plasma TV

Complimentary vs. Substitute  Take 2 complimentary goods. What happens to demand for one when price for the other goes up?  Take 2 substitute goods. What happens to demand for one when price for other goes down?

What Affects Price  Inflation: ____________________  Deflation: ______________________  List everything you can that would influence the price of a new automobile.