Download Benefits of Free Enterprise

Benefits of Free Enterprise
Objective:
• What are the basic principles of the U.S. free
enterprise system?
• What role does the consumer play in the
system of free enterprise?
• What is the role of the government in the
free enterprise system?
*Be sure to leave a couple blank lines under
each question and answer the questions at
the end of the lesson.
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CA Standard(s) Covered
12.3 Students analyze the influence of the federal
government on the American economy.
1. Understand how the role of government in a market
economy often includes providing for national defense,
addressing environmental concerns, defining and
enforcing property rights, attempting to make markets
more competitive, and protecting consumers’ rights.
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Chapter 3 Video
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The Basic Principles of Free Enterprise
Several key characteristics make up the basic
principles of free enterprise.
1. Profit Motive
The drive for the improvement of
material well-being.
2. Open opportunity
The ability for anyone to
compete in the marketplace.
3. Legal equality
Equal rights to all.
4. Private property rights
The right to control your
possessions as you wish.
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5. Free contract
The right to decide what
agreements in which you
want to take part.
6. Voluntary exchange
The right to decide what
and when you want to buy
and sell a product.
7. Competition
The rivalry among sellers
to attract consumers.
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The Consumer’s Role
A fundamental purpose of the free enterprise system is
to give consumers the freedom to make their own
economic choices.
Through their economic
dealings with producers,
consumers make their desires
known. When buying products,
they indicate to producers what
to produce and how much to
make.
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Consumers can also make their
desires known by joining interest
groups, which are private
organizations that try to persuade
public officials to vote according
to the interests of the groups’
members.
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The Government’s Role
Americans expect the government to protect them from potential
problems that arise from the production of various products or the
products themselves. Americans generally favor limited
government intervention in the economy.
Public Disclosure Laws
Laws that require companies to provide consumers with
important information about their products, such as fuel
efficiency of automobiles, side-effects of medication.
-”This medicine may cause drowsiness, etc.”
Public Interest
Both state and federal governments’ involvement in concerns
of the public as a whole, such as environmental protection,
sanitary food production.
-Expirations dates on food
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Section 1 Assessment
1. Americans generally favor
(a) strong government control of the economy.
(b) limited government intervention in the economy.
(c) no government intervention in the economy.
(d) government control of manufacturing only.
2. The basic principles of free enterprise do NOT include
(a) competition.
(b) legal equality.
(c) profit motive.
(d) checks and balances.
Let’s check out what’s NOT good to buy…Click Here!
Chapter 3
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Section 1 Assessment
1. Americans generally favor
(a) strong government control of the economy.
(b) limited government intervention in the economy.
(c) no government intervention in the economy.
(d) government control of manufacturing only.
2. The basic principles of free enterprise do NOT include
(a) competition.
(b) legal equality.
(c) profit motive.
(d) checks and balances.
Let’s check out what’s NOT good to buy…Click Here!
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HW
•Read pages 51 - 55 and
complete questions 1-3 p. 55.
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Promoting Growth and Stability
Objective:
• How does the government track and seek to
influence business cycles?
• How does the government try to promote
economic strength?
• Why and how does the government
encourage innovation?
*Be sure to leave a couple blank lines under
each question and answer the questions at
the end of the lesson.
Chapter 3
Section
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CA Standard(s) Covered
12.3
Students analyze the influence of the federal
government on the American economy.
1. Understand how the role of government in a market economy
often includes providing for national defense, addressing
environmental concerns, defining and enforcing property rights,
attempting to make markets more competitive, and protecting
consumers’ rights.
12.4
Students analyze the elements of the U.S. labor market
in a global setting.
2. Describe the current economy and labor market, including the
types of goods and services produced, the types of skills workers
need, the effects of rapid technological change, and the impact of
international competition.
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Tracking Business Cycles
• Macroeconomics is the study of the behavior and
decision making of entire economies.
• Microeconomics is the study of the economic behavior
and decision making of individuals, families,
households and businesses.
• A business cycle is a period of a macroeconomic
expansion followed by a period of contraction.
• One measure of a nation’s macroeconomy is gross
domestic product (GDP). GDP is the total value of all
final goods and services produced in a particular
economy.
– Economists use GDP to predict business cycles
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Promoting Economic Strength
Policymakers pursue three main outcomes as they seek
to stabilize the economy.
Employment
• One aim of federal economic policy is to provide jobs for everyone who
is able to work.
– Unemployment = 3% - 11% in US (over last 50 years)
– Unemployment Rate: 9.4% for 2010
Growth
• For each generation of Americans to do better than previous ones, the
economy must provide steady growth and continue to produce additional
goods and services.
Stability
• Stability gives consumers, producers, and investors confidence in the
economy and in our financial institutions, promoting economic freedom
and growth.
– Avoid sudden drastic changes in prices.
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Encouraging Innovation
The government encourages advances in technology
and improvements in productivity in several ways.
Technology is the process used to produce a good or
service.
• Federal agencies fund
many research and
development projects.
Also, new technology
often evolves out of
government research.
•Gov’t Grants
•NASA
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• A patent gives the
inventor of a new
product the exclusive
right to produce and
sell it for 20 years.
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Section 2 Assessment
1. Policymakers encourage all of the following EXCEPT
(a) stable productivity.
(b) high employment.
(c) stable prices.
(d) steady growth.
2. The government encourages advances in technology and improvements
in productivity by
(a) maintaining steady price controls.
(b) funding research and development projects at many levels.
(c) hiring more workers to reduce unemployment.
(d) regulating banks and other financial institutions.
Let’s watch NASA TV!!! Click Here!
Chapter 3
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Section 2 Assessment
1. Policymakers encourage all of the following EXCEPT
(a) stable productivity.
(b) high employment.
(c) stable prices.
(d) steady growth.
2. The government encourages advances in technology and improvements
in productivity by
(a) maintaining steady price controls.
(b) funding research and development projects at many levels.
(c) hiring more workers to reduce unemployment.
(d) regulating banks and other financial institutions.
Let’s watch NASA TV!!! Click Here!
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HW
•Read pages 57 - 60 and
complete questions 1 - 6 p. 60.
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Providing Public Goods
Objective:
• What are public goods?
• What is a market failure?
• How does government manage
externalities?
*Be sure to leave a couple blank lines under
each question and answer the questions at
the end of the lesson.
Chapter 3
Section
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CA Standard(s) Covered
12.3
Students analyze the influence of the federal
government on the American economy.
1. Understand how the role of government in a market
economy often includes providing for national defense,
addressing environmental concerns, defining and enforcing
property rights, attempting to make markets more
competitive, and protecting consumers’ rights.
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Public Goods
• A public good is a shared good or service for which it
would be impractical to make consumers pay
individually and to exclude nonpayers.
– Public goods are funded by the public sector, the
part of the economy that involves transactions of the
government.
– A free rider is someone who would not choose to
pay for a certain good or service, but who would get
the benefits of it anyway if it is provided as a public
good.
• Would you pay for the new Bay Bridge? Would
you use it?
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Market Failures
• Would the free market ensure that roads
are built everywhere they are needed?
– It’s doubtful. Neither could individuals
afford to pay for a freeway.
A market failure is a situation in which the market, on its
own, does not distribute resources efficiently.
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Externalities
• An externality is an economic side effect of a good or
service.
– The building of a new dam and creation of a lake generates:
• Positive Externalities
– A possible source of hydroelectric power
– Swimming
– Boating
– Fishing
– Lakefront views
• Negative Externalities
– Loss of wildlife habitat due to flooding
– Disruption of fish migration along the river
– Overcrowding due to tourism
– Noise from racing boats and other watercraft
*The government tries to encourage positive
externalities and limit negative externalities.
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Section 3 Assessment
1. Which of the following is an example of the public sector (Public Good) of the
economy?
(a) consumers purchasing goods from a private company
(b) laborers working for a private construction company
(c) government funding for a new national park
(d) individual donations to charity
2. What is government's role in controlling externalities in the American economy?
(a) government tries to encourage positive externalities and limit negative
externalities
(b) government tries to limit all externalities because they represent market failure
(c) government tries to limit positive externalities and encourage negative
externalities
(d) government tries to encourage all externalities so that the market will be
competitive
Let’s check out the Sierra Club in SF Bay Area… Click Here!
Chapter 3
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Section 3 Assessment
1. Which of the following is an example of the public sector (Public Good) of the
economy?
(a) consumers purchasing goods from a private company
(b) laborers working for a private construction company
(c) government funding for a new national park
(d) individual donations to charity
2. What is government's role in controlling externalities in the American economy?
(a) government tries to encourage positive externalities and limit negative
externalities
(b) government tries to limit all externalities because they represent market failure
(c) government tries to limit positive externalities and encourage negative
externalities
(d) government tries to encourage all externalities so that the market will be
competitive
Let’s check out the Sierra Club in SF Bay Area… Click Here!
Chapter 3
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HW
•Read pages 62-66 (Ch. 3 Section 3)
and complete questions 1-3 p. 66.
•Read pages 67-70 (Ch. 3 Section 4)
and complete questions 1-4 p. 70.
•Study for Test!
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Providing a Safety Net
Objective:
• What role does the government play
in fighting poverty?
• What government programs attempt
to aid those facing poverty?
*Be sure to leave a couple blank lines under
each question and answer the questions at
the end of the lesson.
Chapter 3
Section
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CA Standard(s) Covered
12.3 Students analyze the influence of the
federal government on the American
economy.
3. Describe the aims of government fiscal policies
(taxation, borrowing, spending) and their
influence on production, employment, and
price levels.
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The Poverty Problem
The poverty threshold is an income level below that
which is needed to support families or households.
• The poverty threshold is determined by the federal
government and is adjusted periodically.
–In 2010 = $14,570 (single parent w/ 1 child)
• Welfare is a general term that refers to government aid
to the poor.
–Began by President FDR in the 1930’s
* http://aspe.hhs.gov/poverty/09poverty.shtml
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Redistribution Programs
Cash transfers are direct payments of money
to eligible people.
Temporary Assistance for Needy Families (TANF)
This program allows individual states to decide how to best use
federally provided funds.
Social Security
Social Security provides direct cash transfers of retirement income
to the nation’s elderly and living expenses to the disabled.
Stability
Unemployment compensation provides money to eligible workers
who have lost their jobs.
Workers’ Compensation
Workers’ compensation provides a cash transfer of state funds to
employees injured while on the job.
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Other Redistribution Programs
• Besides cash transfers, other redistribution
programs include:
In-kind benefits
• In-kind benefits are goods and services provided by
the government for free or at greatly reduced prices.
Medical benefits
• Health insurance is provided by the government for
the elderly and disabled (Medicare) and for poor
people who are unemployed or are not covered by
their employer’s insurance (Medicaid).
Education benefits
• Federal, state, and local governments all provide
educational opportunities for those in need.
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Current Event Video
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Section 4 Assessment
1. Welfare includes all of the following EXCEPT
(a) Temporary Assistance to Needy Families
(b) Occupational Safety and Health Administration
(c) Social Security
(d) Medicaid
2. Education programs make the economy more productive by
(a) adding to human capital and labor productivity.
(b) reducing taxes.
(c) providing more jobs in manufacturing.
(d) reducing injuries on the job.
Check out how the government will help pay for college!!! Click Here!
Chapter 3
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Section 4 Assessment
1. Welfare includes all of the following EXCEPT
(a) Temporary Assistance to Needy Families
(b) Occupational Safety and Health Administration
(c) Social Security
(d) Medicaid
2. Education programs make the economy more productive by
(a) adding to human capital and labor productivity.
(b) reducing taxes.
(c) providing more jobs in manufacturing.
(d) reducing injuries on the job.
Check out how the government will help pay for college!!! Click Here!
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HW
•Read pages 67-70 (Ch. 3 Section 4)
and complete questions 1-4 p. 70.
Study for Test!
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