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ACTIVITY B T HE U NITED S TATES’ M IXED E CONOMY OBJECTIVE: To identify characteristics of the U.S. economy. Teaching Notes and Activity Mark the following on the Country table and Mixed Economy continuum. Have students follow along on the Describing Economies activity sheet. 1. The United States has the largest economy in the world today. The United States accounts for one-fifth of the world’s GDP. Most economic activity in the United States is non-governmental. a. Businesses can generally make and sell what they want, free enterprise. People trade goods and services freely for mutual benefit, voluntary exchange. On the Country table, under United States, underline Free enterprise and Voluntary exchange. b. Private individuals and companies control most land and capital. Underline Private property and Private investments. c. Businesses and individuals use their resources to make more money. This profit motive drives companies to expand and be efficient. Next to Profit motive, write $. d. As more people try to acquire resources and make profits, a competitive free market develops. Competition forces the entire economy to operate efficiently. Next to Competitive free market, draw a star ★. e. Have students identify other characteristics of the U.S. economy. Choose one and write it in the blank space under Characteristics. 2. Local, state, and federal governments regulate the free market to prevent certain economic and social problems. Government regulation in the United States places some limits on the use of land, labor, capital, and information. a. Competition is protected by antitrust laws. These stop large companies from using their size to prevent competition. Next to Antitrust Laws, write COMPETITION. b. The monetary policy of the Federal Reserve sets a minimum interest rate. Next to Monetary policy, write CAPITAL. CHART 7 C OMPARING E CONOMIES c. Patents and copyrights restrict how people use original ideas. Next to Patent, copyright, write INFORMATION. d. As a class, discuss how other regulations on the chart control the use of the four main resources. Add the main resource regulated next to the regulation. e. Governments regulate resources in other ways. For example, communities use zoning laws to restrict the use of land. Have students identify examples of how governments in the United States regulate resources. Write one on the blank line. 3. In addition to regulating resources, the U.S. government also guarantees some services for the common good. a. Income support, such as Social Security and health care programs, insure that Americans have a minimum standard of living. Next to Income support and Limited health care, write S.O.L. for standard of living. b. As a class, discuss how other social guarantees are used for the common good. c. Have students identify other government social guarantees, such as anti-discrimination laws. Write one on the blank line. 4. Because the U.S. economy contains elements of both market and command economies, it is a mixed economy. a. At the top of the table, under Type of System, circle MIXED. b. Now find the United States on the Mixed Economic continuum. Circle its name. c. Because most of the economy is unregulated and market-driven, the United States is listed near the top of the continuum. At the top of the continuum, underline Market. Extending the Activity Have students complete their Describing Economies activity sheet for another mixed economy. C H A R T 7 C OMPARING E CONOMIES NAME Describing Economies Country ECONOMIC SYSTEMS Traditional Country United States Economic System Decisions are based on customs and beliefs passed down from generation to generation. Economic System Type of System Examples: Type of System Mixed Characteristics • Free enterprise • Competitive free market Characteristics • • Voluntary exchange • Profit motive • • Private property • • Private investments • Market Decisions are made by individuals who own factors of production and buy and sell goods in a free market. Examples: • Role of Government Role of Government Regulation of Resources Regulation of Resources land, labor, capital, information land, labor, capital, information • Antitrust laws • Patents, copyright • • Bank regulations • Environmental protection • • Monetary policy • Minimum wage • • Mixed Individual decision-making is combined with different degrees of government regulation and intervention. Examples: • Social Guarantees • Income support • Right to public education Social Guarantees • • Limited health care • Law and order • • • NYSTROM HERFF JONES EDUCATION DIVISION Command Government controls factors of production and makes all decisions about their use. Examples: The Nystrom ECONOMICS Series