FrontPage: Get ready for your quiz. Last Word: Chapter 2 Section Review due Friday Every Super Bowl Football Ever In One GIF

Chapter 2: Economic Systems and the American Economy

Introduction You probably have set some goals in your life, such as going to college, learning a trade, or opening a business. If you were to compare your personal goals to the goals of a North Korean teenager, the lists might vary widely. One of the reasons for this variance is that each of these persons lives in a community or nation with a different economic system, or way of determining how to use resources to satisfy people’s wants and needs.

Three Basic Questions What goods and services should be produced? How should they be produced? Who will get the goods and how will they be distributed?

Types of Economic Systems

A traditional economy is based on customs and beliefs passed down for generations. A command economy is when government leaders answer the three basic questions.

Types of Economic Systems A market/capitalist economy is when individuals make the decisions. A mixed economy is a combo of market and command (private ownership of property and individual decision making are combined with govt. regulations).

6 Characteristics of the American Economy

Adam Smith “Father of Capitalism” described an economic system called capitalism. Pure capitalism can be referred to as a laissez- faire system, or a system where people and businesses make economic decisions without government constraints. Smith’s ideas influenced the United States’ basic economic system. Limited Role of Government

A market economy offers a freedom of choice. A seller can choose to make or not make a product, and you can choose to buy it or not. Freedom of Enterprise 6 Characteristics of the American Economy

People can basically buy what they want. Demand will determine what is produced. Government sets safety standards. Government regulates price in some industries. Freedom of Choice 6 Characteristics of the American Economy

People produce goods to make a profit, or money left after costs of production are paid. The desire to make money is called profit incentive. There is also a risk of losing money. Profit Incentive 6 Characteristics of the American Economy

Private property is property held by individuals or groups rather than the federal, state, or local government. Individuals control how property is used. Private property is protected by the United States Constitution. Private Property 6 Characteristics of the American Economy

Different people can produce similar products and services. Competing businesses try to win customers with lower prices or better quality goods and services. Businesses need to use resources efficiently to stay competitive. Competition 6 Characteristics of the American Economy

In the United States, most industries allow anyone to start a new business. Competition 6 Characteristics of the American Economy

Goals of Our Nation

Nations have values, and they set goals for themselves based on those values. The United States is no exception. Its goals are evident in the supreme law of the land—the Constitution—as well as in its government policies and in the actions of people like you.

Goals of Our Nation Economic Freedom: to allow individuals to make choices Economic Efficiency: to use limited resources wisely Economic Equity: to exhibit fairness— protected by laws Economic Security: to provide protection for risks we cannot control

Goals of Our Nation Economic Stability: to reach a stable economy Economic Growth: to grow and expand the economy Trade-Offs Among Goals: achieving national goals require trade-offs.

Rights and Responsibilities People have the right to do what they want within the law. People have to behave responsibly in order for the system to work. People are responsible for understanding how government policies affect the economy and to cast their votes accordingly.