The Economic System of the United States I can explain the basic characteristics of the U.S. Free-Enterprise System

Characteristics of the Free Economic System  Create a chart with six columns labeled 1-6.  Each number will represent a characteristic of the Free Enterprise System 1. Private ownership 2. Economic freedom 3. Economic incentives to produce (profit) and consume (desirable products) 4. Voluntary and mutually beneficial exchanges between buyers and sellers; 5. Competitive markets 6. Limited government

Characteristics of the Free Economic System  Define the Six characteristics in your own words 1. Private ownership 2. Economic freedom 3. Economic incentives to produce (profit) and consume (desirable products) 4. Voluntary and mutually beneficial exchanges between buyers and sellers; 5. Competitive markets 6. Limited government

Primary benefits of the U.S. mixed market economy  Economic freedom – producers and consumers are largely free to act at will in the market; they can move, innovate, create, improve, buy, sell, advertise, solicit, compete, etc.;  Opportunity – freedom allows people to take advantage of changing trends, technology, market conditions  Variety and quality of products – competition and profit potential encourage producers to make products that consumers will buy  Efficiency – the competition to produce profitably encourages producers to minimize costs and maximize productivity, thus discouraging wasteful use of scarce (and costly) resources.

Role of the Government in the Economy  I can analyze the costs and benefits of various economic policies and decisions related to the economic goals of economic growth, stability, full employment, freedom, security, equity, and efficiency.

Major Economic Goals of the U.S. Government 1. Economic freedom 2. Economic efficiency 3. Economic security 4. Economic growth 5. Price stability 6. Equity 7. Full employment

Major Economic Goals of the U.S. Government 1. Economic freedom – maximizing consumer and producer choice; 2. Economic efficiency – minimizing waste of scarce resources by encouraging  competitive markets,  managing negative externalities,  and providing public goods;

Major Economic Goals of the U.S. Government 3. Economic security – providing rules and protections for those in the marketplace Social Security, Medicare/Medicaid, Unemployment benefits, etc., 4. Economic growth – encouraging real, steady increases in national income and production; Measured by changes in GDP and GNP

Major Economic Goals of the U.S. Government 5. Price stability – keeping inflation under control  Governments Fiscal and Monetary policy  Tracked by measurements of inflation (CPI) 6. Equity – dealing with uneven income distribution  Minimum Wage  Transfer Payments (food-stamps etc.) 7. Full employment – creating an environment in which all those looking for work can find it. The lowest unemployment rate that can be achieved given existing resources without triggering inflation Through Fiscal and Monetary policy