1. Evaluating Economic Performance and Capitalism Chapter 2

2. Economic and Social Goals Every society has ideals and goals for what they want in their system Every society has ideals and goals for what they want in their system In the U.S., the following are our economic goals In the U.S., the following are our economic goals

3. Economic and Social Goals Economic freedom Economic freedom Economic efficiency Economic efficiency Economic equity Economic equity Economic Security Economic Security Economic Stability Economic Stability Economic Growth Economic Growth

4. Capitalism Our economy, and most market economies, is based on capitalism. Our economy, and most market economies, is based on capitalism. Capitalism is a system where private citizens (many of whom are entrepreneurs) own the factors of production. Capitalism is a system where private citizens (many of whom are entrepreneurs) own the factors of production. Free enterprise is another term used to describe the U.S. economic system. Free enterprise is another term used to describe the U.S. economic system.

5. Capitalism In a free enterprise system, competition is allowed to flourish with minimum government influence. In a free enterprise system, competition is allowed to flourish with minimum government influence.

6. 6 Characteristics of a Free Enterprise System 1.Freedom of Choice 2.Freedom of Enterprise 3.Private property rights 4.Profit Incentive 5.Competition 6.Limited Role of Government (Adam Smith)

7. The Role of Government Protector—enforces laws Protector—enforces laws Provider and Consumer—provide public services (such as parks, roads, etc) and consumes factors of production to produce these services Provider and Consumer—provide public services (such as parks, roads, etc) and consumes factors of production to produce these services Regulator—preserves competition in the marketplace (no monopolies) Regulator—preserves competition in the marketplace (no monopolies) Promotes national goals Promotes national goals