1. Modern Economies – Free Market, Centrally Planned or somewhere in between Mr. Schoonover 9/22/2009 Lecture #2

2. Review Draw and label the Circular Flow Model of a Market Economy. ◦Give me an example of physical flow in the model and monetary flow for the model. What is the “motivating force” in the free market? Give me three examples of a Centrally Planned Economy. What kind of Economy does the United States have?

3. Mixed Economies No one Economic System can satisfy everyone’s wants and needs, this is why most economies today are a Mixed Economy. ◦North Korea and Free Markets? Mixed Economies are a combination of Free Market and Centrally Planned Economies.

4. Circular flow of a Mixed Economy Draw Diagram in your notes. Monetary Flow ◦Money is taken from our pay checks when we get paid. ◦We pay taxes on what we buy. Physical Flow ◦Some people work for the Government. ◦Some of the products made end up in governments.

5. Mixed Economies So what Economy is the United States? ◦In what ways is it a Free Market Economy? ◦In what ways is it a Centrally Planned Economy? If each Economy in the world is a Mixed Economy, how come we are not all the same? The amount of government intervention in Mixed Economies varies. ◦Why do we have government intervention?

6. Types of Government Intervention Minimum Wage Social Security Taxes Roads Schools Health Care?

7. Economies Around The World Free Market Centrally Planned

8. What goals does a Mixed Economy Meet? Efficiency Equity Freedom Security Growth