1. Unit 2 E CONOMIC S YSTEMS

2. Warm Up 1. What does equality mean to you? 2. How do you define equality? 3. Should we be equal in every aspect of our lives?

3. T YPES OF E CONOMIC S YSTEMS Traditional Economies – the allocation of scarce resources, and nearly all other economic activity, stems from ritual, habit or custom. Command Economies – are economies in which a central authority makes most of WHAT, HOW, and FOR WHOM decisions. Economic decisions are made by the government. Market Economies – People and firms act in their own best interests to answer the WHAT, HOW, and FOR WHOM questions.   

4. M IXED E CONOMIES OR MODIFIED FREE ENTERPRISE ECONOMY Most economies in the world today featuresome mix of traditional, command, economies. The United States has a combination of command (planned) and market economies. We have a market (free enterprise) economy with some government intervention. andmarket

5. P LACE THE U.S. E CONOMY ?

6. S PECTRUM Planned OFMIXEDECONOMIES Free Socialism The Role of Government Promotes competition and Supplies' Public Goods Makes most, if not all Economic Decisions Owns most key resources North Korea Russia India France ChinaChina Germany Great Britain Canada United States Hong Kong

7. C S ECTION 2 E VALUATING E CONOMI P ERFORMANCE 1) Economic Freedom – freedom to make your own economic decisions 2) Economic Efficiency – benefits gained must be greater costs incurred 3) Economic Equity – a strong sense of justice, impartiality, and fairness R than

8. E VALUATING E CONOMIC P ERFORMANCE CONTINUED 4) Economic Security – protection adverse economic events as layoffs and illnesses from 5) Full Employment – to produce as many jobs as possible 6) Price Stability – steady prices, void of inflation 7) Economic Growth – to meet the needs of population growth R

9. S ECTION 3 F REE E NTERPRISE C APITALISM In a Capitalistic Economic System individuals own most of the factors of production. This economic system exists due to free enterprise. In a free enterprise economy, competition is allowed to flourish with a minimum of governmental interference. R

10. M AJOR F EATURES OF C APITALISM 1. Economic Freedom 2. Voluntary Exchange 3. Private Property Rights 4. Profit Motive 5. Competition

11. C OMPETITION & F REE E NTERPRISE Economic Freedom allows individuals and businesses to choose their economic destiny. A Voluntary Exchange happens when both parties benefit from the transaction. R

12. C OMPETITION & F REE E NTERPRISE CONTINUED The privilege that entitles people to own and control their possessions as they wish is known as Private Property Rights.

13. g. C OMPETITION & F REE E NTERPRISE Profit is the extent to which persons or organizations are better off at the end of a period than they were at the beginnin CONTINUED Profit motive is the driving force that encourages people and organizations to improve their material well being.

14. C OMPETITION & F REE E NTERPRISE CONTINUED The result of Competition is that goods and services are produced at the lowest possible cost and allocated to those who arewilling andabletopayforthem. R

15. T HE R OLE OF THE E NTREPRENEUR The entrepreneur is one of the most important people in a free enterprise (capitalistic) economy. The entrepreneur organizes and manages land, labor, and capital in order to seek the reward called profit.In other words – Entrepreneurs make things happen.

16. T HE R OLE Consumers play OF THE C ONSUMER an important role in the American Free Enterpriseeconomy. They control what is produced when they express their wants services. throughpurchasinggoodsand R

17. T HE R OLE OF G OVERNMENT ( CONTINUED ) Provider & Consumer – Federal, State and Local governments provide goods and services for citizens. the process of providing, government consumes factors of production. In

18. T HE R OLE OF G OVERNMENT Protector – The government protects property rights and enforces contracts to ensure an efficient and fair economy.

19. T HE R OLE OF G OVERNMENT ( CONTINUED ) Regulator – The national government charged with preserving competition. Local and state governments control businesses with zoning regulations, is taxes, insurance rates,etc. Promoter of National Goals The government should reflect the will of the majority of its people.