Use decision making model to identify strengths and weaknesses of the free market and command economies?

Mixed Economy  Balancing Control and Freedom 1. A society must assess its values and prioritize its economic goals. Some goals are better met by the open market and others are better met by government action.

Mixed Economy  Mixed economies have all the economic systems present.  Which goals are better met by the free market and which are better met through government intervention in the economy? Explain.  Societies must evaluate the opportunity cost of pursuing each goal.

Comparing Mixed Economies  All mixed economies are different.  On one end of the continuum are centrally planned economies.  On the other end are free market economies.  Most countries fall somewhere in the middle.  Where do we fall?

Continuum of Mixed Economies  See pg 42 for flow model of mixed economy  See pg 43 for continuum of mixed economies

What Role Should Government Play?  Government intervenes in the economy by establishing programs to provide services to businesses and people.  They pay for these services by taxing their citizens.

Brainstorm  Identify examples of the activities that local, state, and national governments carry out in the U.S. economy

6 functions of Gov in an economy  Maintaining Legal and Social framework. example: create laws and provide courts, provide information and services to help economy function better, establish monetary system, define and enforce property rights.  Maintaining Competition Example: create and enforce antitrust laws; regulate monopolies.  Providing public goods and services example: provide goods and services that markets are unable or unwilling to provide, such as national defense.

Unit 5 : Microeconomics National Council on Economic Education Illustrating a Negative Externality

Unit 5 : Microeconomics National Council on Economic Education Illustrating a Positive Externality

6 functions of Gov in an economy  Redistributing Income Example: Higher income tax rates for rich than for poor, provide social security, and aid to dependent children, medicare, medicade.  Correcting for externalities Examples: taxes to reduce negative externalities, such as environmental pollution. Subsidies to encourage positive externalities such as education.  Stabilizing the Economy Example: Use government budgets and or money supply to promote economic growth, control inflation, reduce unemployment.

Denmark Video  What role does government play in Denmark’s economy?  Evaluate the strengths and weaknesses of Denmark’s economic system and the United States economic system.  Which system would you rather live with? Explain why.

Denmark Video How much government intervention should there be in our economy, and what should it be used for?  Remember that government programs are paid for by its citizens through taxes.

Assignment  Find newspaper article that provides an example of the government functioning in the economy.  Summarize article- main point and 4 supporting details  Classify which of the six functions of government the article falls under.  Explain how a “liberal” and “conservative” might feel about the article. Explain why they would feel that way.  How do you feel about the role of government portrayed in your article? Why? Do your views lean towards being “liberal” or “conservative”?