1. Civics Core 100, Goal 8
Goal 8: The learner will analyze features of the economic system of the United States.

2. Economic Systems

3. Free Market
Decisions are made in free markets based on the interaction of supply and demand
AKA : capitalism, free enterprise
Private citizens own the factors of production

4. Mixed Economy
Individuals carry on their economic affairs freely, but are subject to some government REGULATION.

5. Communism (Command) Opposite of Market Economy
The individual has little, if any influence over how the basic economy functions
The government tells produces what to do

6. Socialism
Belief that the means of production should be owned and controlled by society
Government owns the major factors of production but PRIVATE ownership of small businesses

7. Traditional Economies based on custom or habit
Traditional methods and materials are used to make items in this economy

8. Characteristics of
Market Economy

9. Profit
The money a business receives for its products or services above its costs
Primary purpose of business

10. Competition
The struggle that goes on between buyers and sellers to get the best products at the lowest prices

11. Basic Economic
Questions

12. Basic Economic Questions
WHAT to produce?
HOW to produce?
FOR WHOM to produce?

13. Currency

14. Currency Coins and paper money Money doesn’t have value by itself
The have value only because we accept that they have value; before currency people bartered

15. Supply / Demand

16. Supply
Various quantities of a good or service that producers are willing to sell at all possible market prices
Opposite of demand
The higher the price, the more producers will be willing to make. The lower the price, the fewer items they want to make

17. Demand Desire, willingness, and ability to buy a good or service
The higher the price the fewer consumers will purchase. The lower the price, the more consumers will buy.

18. Substitute and
Complementary Goods

19. Substitute and Complementary Goods
Substitutes: Competing products because consumers can choose one over the other
Change in price in one good, causes the demand of other to change in same direction
Price in good A goes up, the demand for good B goes up
Price in good A goes down, demand for B goes down. VS

20. Substitute and Complementary Goods
Complements: products that are used together
Demand for one good moves in the opposite direction as the price for the other
Price of Good A goes up, Demand for Good B goes down

21. Price Change

22. Surplus
Amount by which the quantity supplied is higher than the quantity demanded
Price is too high
Consumers are unwilling to pay the price
Will lead to needing to lower prices (sales)

23. Shortage
Amount by which quantity demanded is higher than quantity supplied
Price is too low
Suppliers are unwilling to sell their goods or services in large enough numbers to meet demand

24. Equilibrium Price Supply and demand are balanced at this point
There is neither surplus nor a shortage

25. Money and
Banking System

26. Money and Banking System
$ serves as a medium of exchange and a standard of value
Commercial banks provide services such as checking and savings accounts, debit cards, loans, credit cards and certificates of deposit.
Credit Unions perform the same services on a non-profit basis
Bank deposits are insured by the FDIC

27. Types of
Businesses

28. Types of Businesses
Sole Proprietorships: most common type; business owned and operated by a single person
Partnerships: business that 2 or more people own and operate
Corporation: organized business recognized under law that has many of the rights and responsibilities as citizens
own property, pay taxes, sue or be sued

29. Liability

30. Limited Liability
When one purchases stock in a company, that is all they can lose if the company goes out of business.
An advantage for corporations in gaining investments from individuals.
Less risk for investors than owning own business

31. Unlimited Liability Owner is responsible for all debts of the business
Sole Proprietorships and Partnerships
Risky to own a business

32. Circular Flow
Diagram of
Economic Activity