Chapter 2 Section 2 Features of the U.S. Economy Pages 29-35

Objectives 1. Explain the basic principles of free enterprise in the United States. 2. Name the two markets of the circular flow model. 3. Explain how the circular flow model reflects exchange.

Free Enterprise Define the word free Define the word enterprise

Free Enterprise The capitalist economy of the United States is called a free enterprise system because individuals in the United States have a great number of economic freedoms.

Five Features of Free-Enterprise The right to own private property and enter into contracts. Make individual choices Engage in economic competition Make decisions based on self-interest Participate in the economy with limited government involvement and regulation

Collage Choose a partner to work with on this project. Using magazines create a collage illustrating the five basic principles of the free-enterprise system in the United States. Write a caption the explains how the collage represents the features of a free-enterprise system.

Activity Consider a fast-food restaurant. Give examples of how a fast-food restaurant demonstrates each of the five features or benefits of a free- enterprise economy.

Economic Actors in Free Enterprise Producers-provide goods and services in the market. They rely on entrepreneurship to develop new products and production methods. Consumers-influence production by purchasing goods and services. Government-oversees and regulates the effects of decisions on the economy as a whole.

Circular Flow Model Markets-product market (green)-represents all of the exchange of goods and services in the economy. Resource market (gold)-exchange of resources between households and business firms and the government. Income-money paid to households by business firms and the government in exchange for the households’ resources.

Flows-Two different types of flows 1. Flow of resources and products 2. Flow of payments