Chapter 2.4: Mixed Economies

Bell Ringer Discussion On a piece of paper, list three examples of ways in which the U.S government or state government provides goods/services or regulates how goods/services are provided. Share What would happen if those were privately owned? Why do you think our gov’t intervenes in the market in instances we stated? After first bullet hear student’s answers…create discussion of “what would happen if those all were owned by private businesses?”

The Rise of Free Markets Even free market thinkers like Adam Smith recognized the need for a limited degree of government involvement in the economic marketplace. In a mixed economy, the market is free but has a certain degree of government control

Introduction What are the characteristics of a mixed economy? A mixed economy is characterized by: A market-based economy with some government intervention Government helps societies meet needs that would be too difficult for them to meet under a totally free market economy, such as education Government protects property rights and ensures that exchanges in the marketplace are fair

The Rise of Free Markets Since Adam Smith’s time, government intervention in the market has increased. Laissez faire Belief that gov’t generally should not intervene in the marketplace

The Rise of Free Markets, cont. What is one reason the government plays a role in the economy? The government: Provides national defense and public education Protects private property Ensures fair exchanges in the marketplace (Laws require businesses to give honest information to consumers) Checkpoint Answer: Provides national defense and public education, protects private property, and ensures fair exchanges in the marketplace.

Reebok Pays $25 Million to Settle FTC Claims of False Ads for Toning Shoes

How do we know? Car’s horsepower? Explain without gov’t intervention a company could say whatever it wanted Phones/ipad – could state it had whatever speed it wanted

The Rise of Free Markets Since Adam Smith’s time, government intervention in the market has increased. Mixed economy Market-based economic system in which the gov’t is involved to some extent.

Circular Flow Model of a Market Economy Briefly look at slide, see if anyone understands it, then show video on next slide

Circular Flow Model of a Mixed Economy Answers: 1. By taxing firms and households and spending money in the product market and the factor market. 2. Answers will vary.

Comparing Mixed Economies Most modern economies are mixed economies. The figure below shows a continuum of mixed economics in today’s world. Why is China a little bit farther to the right on the diagram below than Cuba? Answers: Because China is moving toward a more free market based economy.

North Korea and China China, is closer to the center of the because they are going through an economic transition toward privatization of state-owned firms.

Hong Kong- All the way on the right!?!?! Hong Kong represents one of the world’s freest markets. The government protects private property and rarely interferes in the free market, aside from establishing wage and price controls on rent and some public services. Wait!? Isn’t Hong Kong part of China? It is. It operates under a “One country, two systems” policy. Hong Kong has it’s own money Need a visa to enter China from Hong Kong

Head-to-Head Battle pg 42 Helmet Makers Doctors State Gov’t Anti-helmet lobbyists Once in groups, use the article and internet to support your belief! Are you for or against helmet laws? Assume we live in PA Map

Mixed Economies Economic transition- period of change when a nation moves from one economic system to another “8 Ways Privatization Has Failed America” On my Wiki, skim it, discuss Privatization Gov’t sells business/service to individuals and allows them to compete in the marketplace.

So what’s our economy!? Market economy by definition – “an economy in which the resources are owned and controlled by the people of the country” The United States is a mixed economy whose foundation is the free market. It is characterized as a free enterprise system.

Mixed Economies In a F.E.S, investments in firms are made in a free market by private decision…gov’t has no say! Free enterprise system Economic system characterized by private OR corporate ownership of goods.