Download GOAL 8: Features of the United States Economic System

GOAL 8: Features of the United States Economic System
Objective 8.01
1. Fill in the chart: CHARACTERISTICS OF ECONOMIC SYSTEMS
ECONOMIC SYSTEM
CHARACTERISTICS
An economic system in which the
Traditional
decisions of what, how, and for whom to
produce are based on custom or habit
An economic system in which the major
Command Economics
economic decisions are made by the central
government
Market Economy aka Capitalism Adam System in which individuals own the
factors of production and make economic
Smith wrote The Wealth of Nations
decisions through free interaction
System combining characteristics of more
Mixed Economies
then one type of economy
Objective 8.02: Free Market Enterprise, Private Ownership, and Individual
Initiative
1. How does the 5th amendment protect property ownership?
Imminent domain, right to property
Patents & copyrights –
The owner’s exclusive right to control, publish, and sell original work
Objective 8.03: The Circular Flow
1. Fill in the chart: THE CIRCULAR FLOW
production
markets
business
sector
Government Sector
factor markets
(supply & demand)
Objective 8.04: Supply, Demand, and Prices
1. How are supply, demand, and prices related?
They all are affected by each other.
Ex. Supply goes up then demand goes up
foreign
sector
consumer
sector
2. List the factors that effect demand.
Population, income, tastes, expectations, substitution, complements
3. List the factors that effect supply.
Cost of resources, productivity, tech, government policies, taxes,
subsidies, expectations, number of supplies
4. How do substitutes and complements affect supply and demand?
As a substitute replaces something (coffee / tea) prices rise for both
Objective 8.05: Shortages, Surpluses, and Prices
1. Fill in the chart:
TERM
DEFINITION
Surplus
Too much of something
Shortage
Not enough of something
WHAT HAPPENS TO
PRICES
2. When supply and demand are equal, we have an equal price.
3. What is a price ceiling?
Maximum price that can be charged for goods and services
4. What is a price floor?
Lowest price that can be charged
5. What effect does inflation have on prices?
They go up
6. What effect does deflation have on prices?
They go down
Objective 8.06: Competition, Price, Supply
1. Why is competition important in our economy?
Competition encourages businesses to produce high quality products and
keep prices low
2. How do consumers benefit from competition in markets?
Prices are kept relatively low
3. Define monopoly: When one business controls the entire market for a product
4. How does a monopoly hurt the consumer?
The monopoly can raise prices because there is no competition
Objective 8.07: Business Organizations
TYPE OF
BUSINESS
Sole
Proprietorship
DEFINITION
ADVANTAGES
DISADVANTAGES
A business owned
and operated by a
single person
Person does not have
to share revenue
Costs more money to get
started
Partnerships
A business that two
or more people own
and operate
More partners – raise
more money
Complex legal structure
Corporations
Organized business
recognized by the
law that has many
of the rights of an
individual
Ease of raising
financial capital
Expensive and complex to
set up
2. Corporation owners are called stockholders. They buy/sell stocks in the stock
market.
Objective 8.08: Investment Decisions
1. How do businesses, individuals, and the government invest in capital?
Fiscal policy
The federal government’s use of spending
and taxation policies to affect overall
business activity
Monetary policy
Policy that involves changing the rate of
growth of the money supply in circulation
in order to affect the cost and availability of
credit
Banking system
The system of banks in America
Types of Insurance
Objective 8.09: Role of Money
1. List 3 reasons why money is important in our economic system.
 It serves as a medium of exchange – we can trade money for goods
or services
 It serves as a store of value
 It’s a measure of value – it can be used like a measuring stick