1. Modern Economies
In this lesson, students will identify characteristics of modern economies.
Students will be able to define and/or identify the following concepts and terms:
Mixed Economy
Laissez-faire
Free Enterprise
E. Napp

2. Standards
Content Standard 2: The student will evaluate how societies answer the three basic economic questions: what goods and services to produce, how to produce them, and for whom are they produced.
1. Compare the world’s basic economic systems of market (free enterprise), command, and mixed market economies identifying countries that have adopted each and comparing and contrasting the results those economic systems have produced in those countries as measured by GDP, national prosperity, and individual income and wealth.
2. Describe the role of the factors of production, land, labor, capital, entrepreneurship and technology in economic systems.
Content Standard 9: The student will evaluate the economic role of government in a market economy.
1. Explain the role that government has in dealing with issues such as poverty, pollution, and medical research.
2. Describe the costs and benefits of government assistance programs, education, and other government funded services and projects.
E. Napp

3. ESSENTIAL QUESTION
EQ: How do modern economies function in a way that makes lives easier on its subjects?
E. Napp

4. Just as this apple is not perfect, economic
systems are not perfect. While a centrally
planned economy has many problems, a
free market economy is far from perfect.
E. Napp

5. A Mixed Economy
A mixed economy combines elements of different economic systems to meet the needs of the society.
While modern economies are mixed, every mixed economy is slightly different from every other mixed economy.
Some nations lean more towards central planning with some private ownership while other nations are predominantly free market with limited government intervention.
E. Napp

6. The Chinese communists seized power
in However, today, the Chinese
embrace elements of the free market.
E. Napp

7. The Chinese communists realized that
workers needed incentives or reasons
for increasing productivity.
E. Napp

8. The United States is a mostly free market economy. However, the
government does intervene in the
market.
E. Napp

9. It is important to remember that many
abuses occurred in a totally free market.
Child labor is one example of this
abuse.
E. Napp

10. Laissez-faire
Laissez-faire was the belief that the government should not intervene in the market.
It meant “let them do (as they please).”
It allowed businesses to operate without any restrictions.
E. Napp

11. Without government intervention, warning labels would not exist.
E. Napp

12. Heroin could be purchased in your local supermarket.
E. Napp

13. Government intervention protects our environment and our lives.
E. Napp

14. Free Enterprise
The United States’ economic system is called the Free Enterprise system.
A Free Enterprise system is a mostly free market economy with limited government intervention.
The government does intervene in the economy when it is in the public interest.
E. Napp

15. So, modern nations have mixed economies.
However, like milkshakes, mixed economies
are not mixed the same.
E. Napp

16. The government insists that warning labels are placed on potentially
dangerous products. Companies
don’t always want consumers to know.
E. Napp

17. Our Free Enterprise system is mostly a
free market economy. However, the
government acts like a lifeguard and
intervenes in the economy when necessary.
E. Napp

18. Why does the Government sometimes need to intervene in the economy?
There are many reasons why the government intervenes in the economy.
Some reasons for government intervention are:
To inform consumers about products
To protect the environment
To prevent the sale of dangerous goods
To protect workers
E. Napp

19. The government does not allow the sale of dangerous products like
illegal drugs. The government protects
the public.
E. Napp

20. Public Policy
The public interest is the concerns of the public as a whole.
A safer car is in the public interest.
Public policy is laws and standards on topics of public interest.
Requiring car manufacturers to install seatbelts is an example of public policy.
E. Napp

21. The government also requires companies to provide full
information about their products.
E. Napp

22. Public Disclosure Laws
Public disclosure laws are laws requiring companies to provide full information about their products.
Public disclosure laws exist to ensure that consumers are knowledgeable about the products they purchase.
An informed consumer is a protected consumer.
E. Napp

23. We cannot merely look at a product and
know how much fat or cholesterol it
contains.
E. Napp

24. Workers also need the government’s protection. What prevents business
owners from exploiting its workers?
E. Napp

25. Occupational Safety and Health Administration (OSHA)
OSHA is a government agency that issues regulations on workplace safety.
OSHA conducts workplace inspections.
OSHA requires public disclosure of hazards to workers.
E. Napp

26. What prevents companies from dumping harmful chemicals in our rivers?
E. Napp

27. Environmental Protection Agency
The EPA is a watchdog agency that aggressively targets polluting industries by imposing regulations, cleanup requirements, and penalties.
The EPA protects the environment and ensures that companies do not harm the environment.
E. Napp

28. During the Great Depression, many Americans suffered. Poverty rates
increased.
E. Napp

29. President Franklin Delano Roosevelt tried to alleviate the problem by
creating programs to help the poor
and elderly.
E. Napp

30. Welfare
Welfare is a general term that refers to government aid to the poor.
It includes many types of redistribution programs.
Tax dollars are used to provide income and services to eligible poor people.
E. Napp

31. Those below the poverty threshold are considered poor.
E. Napp

32. Cash Transfers and In-Kind Benefits
The government provides cash transfers and in-kind benefits to people in need.
A cash transfer is a direct payment of money to eligible poor people.
An in-kind benefit is a good or service provided to eligible poor people for free or at greatly reduced prices.
E. Napp

33. Social Security provides cash transfers
to the elderly, the disabled, and the
orphan.
E. Napp

34. Food stamps and legal aid are examples
of in-kind benefits. Eligible poor people
are provided with food or lawyers.
E. Napp

35. Temporary Assistance to Needy Families (TANF)
Today, the federal government provides money to state governments.
State governments must design and run welfare programs.
States must adhere to federal rules that create work incentives and establish a lifetime limit for benefits. In the past, there were no limits.
E. Napp

36. Eligible poor people receive benefits
for a limited period of time. While
they receive benefits, they are being
trained to reenter the workforce and
become independent.
E. Napp

37. The goal is independence.
E. Napp

38. The Goal of Welfare Reform
The goal of welfare reform is to help people in need by providing them with financial assistance as well as opportunities to become independent.
Limits exist on welfare to ensure that people are trained and encouraged to reenter the workforce.
E. Napp

39. The government’s helping hand ensures that Americans have a safety
net in difficult times.
E. Napp