This document provides an overview of economic systems and concepts in the United States including: - The main economic and social goals of Americans which include economic freedom, efficiency, equity, security, full employment, price stability, economic growth. - Evaluating economic performance based on unemployment, inflation, economic growth. - The characteristics of a free enterprise or capitalist economy including economic freedom, voluntary exchange, profit motive, private property rights, competition. - The roles of entrepreneurs, consumers, and government in a free enterprise system.

1. Chapter 2 Economic Systems and Decision Making, part 2

2. 2-1: Economic Systems 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

3. Economic Security – Unemployment compensation - Workman’s compensation Social Security – disability and retirement insurance Medicare – health insurance for persons 65 or older Full Employment - Provide as many jobs as possible Price Stability Prevent inflation – rise in the general level of prices Economic Growth Enable people to have more foods and services As population increases, economic growth is necessary to meet everyone’s needs. Future Goals

4. How do we resolve conflicts between competing goals? Trade-offs Compare cost of goal to its benefits Economic Systems and the American Economy

5. 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.

6. ??? 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

7. Assignment Read Chapter 2 – pages 32 – 55. Do Chapter 2 Self Check Quiz from Student Resource Page and e-mail me the results. Review your Chapter 2 Notes. Test on Monday.