Capitalism An Overview of the United States & its Economy

19.2 Review What are the 2 main sectors of the US economy? How does the government sector interact with the above sectors? What benefits and drawbacks are there to the foreign sector in our economy? On a separate sheet of paper, relate scarcity, specialization, division of labor & interdependence to yesterday’ activity, using p. 67.

Feature of Capitalism: definition & example Name 1 limit on this Feature Consumer sovereignty Free Enterprise Private Property Competition Profit Motive Voluntary Exchange

Competition How do you define it? What is good about competition? –Lower prices –More variety, selection –Better quality –More innovation What is bad about competition? –Bigger companies squash smaller ones –Ads mislead gullible consumers –Consumers must take time to comparison shop

Why are all 3 names correct? Free Enterprise: Individuals choose to start & own business. Capitalism: Based on private ownership of resources. The more resources owned, the more successful one is. Market Economy: Buyers & sellers voluntarily exchange goods & services in marketplace for fee.

Who is Adam Smith? Scottish philosopher who wrote The Wealth of Nations Father of Capitalism Theory of the invisible hand Theory of the invisible hand The wealth of a nation is measure not by gold, military, or trade but by the quality of life of the people. The more freedom people have, the better the innovation & profit. Laissez faire means the government will not interfere in the economy.

International Trade, p. 67 Read pp to answer each question: –What is the difference between exports and imports? –Explain 3 reasons nations trade. –Explain what tariffs and quotas are & why countries use them. –Describe the purpose of NAFTA & EU. –What is the difference between a trade deficit & a trade surplus? Which is best?

The Types of Economic Systems, p. 69 Discuss traditionalism. Go over chart of economics systems. Comparison of systems Comparison of systems

Communism Command Economy Example Command Economy Example What county’s economy is representative of this system? Who makes the economic decisions? What are the advantages? What are the disadvantages?

Socialism What county’s economy is representative of this system? Who makes the economic decisions? What are the advantages? What are the disadvantages?

Captalism What county’s economy is representative of this system? Who makes the economic decisions? What are the advantages? What are the disadvantages?

Which Is best? Why? Which of the economic systems is best in practical application? Explain why its advantages outweigh the others.

Developing vs. Developed Nations Define each term. Give 3 examples of each type of nation. Outline basic characteristics of each.

Assignments Work on one of these assignments: –Read Complete questions on Demand. This assignment is due Monday! –Work on your modules. The modules are due by May 28 th for the 100 grade and no later than June 1 st for the average of your modules! –Notes may be turned in starting 5/22!