The Free-Market Capitalist Economy Economics !

What is a Free Market Economy ?

The Free Market Business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy. "Laissez-Faire" Capitalism Physiocrats

The LAW OF SUPPLY The Law of Supply states that the quantity of a good supplied rises as the market price rises, and falls as the price falls

Law of Demand The Law of Demand says that the quantity of a good demanded falls as the price rises, and rises as the price falls.

Equilibrium Price The market price at which the supply of an item equals the quantity demanded .

American Capitalism: A Short History American Revolution was caused partly by Britain’s policy of Mercantilism Framers of the Constitution were gentry and merchants Admired Adam Smith’s Wealth of Nations

American Revolution was caused partly by Britain’s policy of Mercantilism

Framers of the Constitution were gentry and merchants

Admired Adam Smith’s Wealth of Nations

The U.S. Constitution Federalism limited power of States on economic matters Limited the power of Federal Government to tax, regulate, spend. Protected the Right of Property - 5th Amendment

Federalism limited power of States on economic matters

Limited the power of Federal Government to tax, regulate, spend.

Protected the Right of Property - 5th Amendment

Chief Justice John Marshall Ruled consistently in favor of free-markets over regulation by states Ruled against grants of monopoly by states Ruled for Federal power over State’s Rights

Ruled consistently in favor of free-markets over regulation by states

Ruled against grants of monopoly by states

Ruled for Federal power over State’s Rights

The Great Depression & New Deal 1933 -1941

The Era of Big Government Begins