1. Chapter 3 America’s Free Enterprise System

2. Constitutional Protection Property Rights 5 th Amendment “be deprived of life, liberty, or property without due process of law: nor shall private property be taken for public use without just compensation” Taxation 16 th Amendment in 1913 first gave Congress the right to set a tax on income.

3. Basic Principles Profit Motive Open opportunity= everyone can compete Economic Rights= legal equity, private property rights, free contract, voluntary exchange, competition

4. The Role of the Government Disclosure Laws= warning labels, nutrition facts Protecting Health, Safety, Well Being, and Environment Regulations (may hinder business but look out for consumers and workers

5. Major Regulatory Agencies Food and Drug Administration Federal Trade Commission Federal Communications Commission Federal Aviations Administration Equal Employment Opportunity Commission Environmental Protection Agency Occupational Safety and Health Administration Consumer Product Safety Commission Nuclear Regulatory Commission (These are ran by the Executive Branch of the Federal Government)

6. Section 2 Promoting Growth and Stability

7. Macroeconomics is the study of the entire economy Microeconomics is the study of economic behavior of small units, such as family, individual, business Macro=Big Micro=Small

8. Business Cycles The economy is always in periods of expansion followed by periods of contraction Gross Domestic Product GDP is used to measure growth

9. Government tries to prevent huge swings in the business cycle Employment= tries to keep unemployment between 4 and 6% Growth= Continue to increase our standard of living with new goods and services hard work technology Stability= prevent inflation and controls interest rates

10. Government Success Federal agencies fund Research and Development (R&D) Land Grant Colleges= Federal Government gave land for the purpose of schools NASA= satellites, tang, Velcro Patents

11. What is a Public Goods It is a Public Good if it would be inefficient or impractical to 1) to make consumers pay individually pay for a percentage of a shuttle launch or cleaning of Mount Rushmore 2) to exclude non payers People that don’t pay for roads can’t use them

12. Public Sector provides public goods (government) Private Sector are all business and individual transaction outside of the government

13. Free Rider Problem Someone who would choose not to pay, but would benefit from the service Examples…..National Defense, Firefighters

14. Externality is an economic side effect of a good or service that effects someone that did not make the decision Positive Mrs. Garland purchases a run down home. She fixes it up. The neighbors benefit from increased property value Negative Mr. Fowler takes up the accordion. He hold Polka Party’s every Friday. You hate Polka Music

15. Section 4 Providing a Saftey Net

16. Welfare Term used for any governent program designed to assist the poor.

17. A Century of Government Programs 1916-Workers Comp 1933- Federal Emergency Relief Administration 1935-Social Security 1950- extend social securty 1964-Great Society HeadStart 1965-create Medicare 1974-Food Stamp Program 1996 Temporary Assistance for Needy Programs (Welfare Reform)