Chapter 2 Economic Systems and Decision Making, part 2
Americans share several major economic and social goals.
Economic Freedom – make own economic decisions
Economic Efficiency - wise use of factors of production
Economic Equity - justice, impartiality, and fairness
- equal pay for equal work
- minimum wage
- truth in advertising
- “lemon laws”
2-2: Evaluating Economic Performance
– Unemployment compensation
- Workman’s compensation
Social Security – disability and retirement insurance
Medicare – health insurance for persons 65 or older
- Provide as many jobs as possible
Prevent inflation – rise in the general level of prices
Enable people to have more foods and services
As population increases, economic growth is necessary to meet everyone’s needs.
Cleaner environment? Preservation of endanger species?
How do we resolve conflicts between competing goals?
Compare cost of goal to its benefits
Economic Systems and the American Economy
Action: Place high tariff on import of foreign goods. Goal: Goal: helps achieve works against
2-3: American Free Enterprise
Free enterprise – capitalist economy in which competition is allowed to flourish with a minimum of government interference
Characteristics of Free Enterprise Capitalism
Economic Freedom People are free to choose their jobs, employers, and how to spend their money. Voluntary Exchange Buyers and sellers may engage freely and willingly in market transactions. Profit Motive People and organizations can improve their material well-being by making money. Private Property Rights People may control their possessions as they wish. Gives people incentive to work, save, & invest. Competition Producers and sellers compete with one another to attract consumers.
??? Role of Entrepreneurs Role of Consumers Role of Government
Organize land, capital and labor in order to seek profit
Accept the risk of loss
Decide HOW to produce
Are innovators and catalysts
Decide WHAT is produced by how they spend their money
Spur development of new products by changing their wants
As protector, provider and regulator, ensures and enforces that economic and social goals are being carried out
Is a large consumer to the economy
Read Chapters 1 and 2.
Do Chapter 1 and 2 Self Check Quizzes from Student Resource Page and e-mail me the results.