1. Modern Economies & The US Economy

2. Rise of Mixed Economies No single economic system has all the answers Centrally planned – too cumbersome Traditional – little potential for growth Market – has its drawbacks as well (as we witnessed over the past 3 years.

3. Adam Smith Free-market system provides greatest benefits Even Smith acknowledged need for some involvement Modern society calls for greater involvement

4. Balancing Control and Freedom Society must assess goals and values. – Some met by government, some by free-market – What is the opportunity cost?

5. Comparing Mixed Economies Foundation of US economy – Free enterprise Free enterprise – characterized by private or corporate ownership of capital goods. Continuum.

6. Comparing Mixed Economies Centrally PlannedFree Market North Korea Cuba Russia China Poland France UK US Hong Kong Singapore

7. Mixed Economies Where Government Intervention Dominates N. Korea – one end of the scale – Gov. owns all property – State-owned industries produce 95% of goods. – China – ¼ of all enterprises are freely owned – In transition from central to free system

8. Mixed Economies Where Market Dominates Hong Kong – One of the world’s freest markets – Private sector rules - Highly receptive to foreign investment

9. US Economy Free enterprise Gov. intervenes to keep order but low involvement Some argue for more, some less Private property protected

10. The Economy Today

11. Between 1997 and 2006, the price of the typical American house increased by 124%.