1. Mixed Economies

2. The Rise of Mixed Economies
Laissez Faire- Government generally should not intervene in the marketplace.
Some needs that markets could meet fall to governments so that all members of society can participate.
Education
Healthcare
Mass transit
Private Property- Property that is owned by individuals or companies, not by the govnt or people as a whole
Constitution protects this fundamental right

3. Opportunity Cost (what are you willing to give up?)
Governments create laws protecting property rights and enforcing contracts.
Patent Laws
laws insisting on competition
Some goals are better met by the open market and some better met by the government.
Opportunity Cost (what are you willing to give up?)
Pay taxes to fund the Army?
To give money to people without jobs?
Give all people an education?
To subsidize farms?
Should government make minimum wage?

4. PHYSICAL FLOW
Monetary Flow
Govnt Purchases
TAXES
Firms
Households
GOVERNMENT
EXPENDITURES
EXPENDITURES
TAXES
Govnt Owned Factories
Monetary Flow
PHYSICAL FLOW

5. Mixed Economies (govnt dominates)
The foundation of the U.S. economy is the free market.
Free Enterprise- An economic system characterized by private or corporate ownership of capital goods.
Investments are determined by private decision rather than by state control
China is in a transition (a period of change in which an economy moves away from central planning toward a market-based system.
To make this transitions, state firms must be privatized (sold to individuals) and allowed to compete with one another in the marketplace.

6. Mixed Economies- Market Dominates
Hong Kong- one of the world’s freest markets.
United States has a free enterprise economy, but the government still intervenes to keep order, provide vital services, and to promote the general welfare.
We enjoy a high level of economic freedom!
U.S. law protects private property
We have a low level of government intervention
Foreign investment encouraged
Free trade encouraged (U.S. protects some domestic industries and retaliates against trade restrictions imposed by other nations.)
Banking industry operates under relatively few restrictions
Foreign owned banks have few additional restrictions.

7. CONTINUUM OF MIXED ECONOMIES
CONTINUUM- a range with no clear divisions
UNITED KINGDOM
IRAN
MEXICO
FRANCE
HONG KONG
NORTH KOREA
CHINA
SOUTH AFRICA
CANADA
SINGAPORE
CUBA
RUSSIA
POLAND
JAPAN
UNITED STATES