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Ch 3.1
Benefits of Free Enterprise
Free Enterprise
Today there are over ___ million unincorporated businesses.

This includes 3 million ___________-owned businesses.

For centuries, people have considered America to be a “__________________”.
WHY SUCCESS??
Open _________
Natural resources
Uninterrupted flow of ______________ with different backgrounds and experiences
A tradition of _______________
The social and political commitment to giving people the ____________ and flexibility to try
out their business ideas and ____________ in the marketplace
Constitutional Protections
The bill of Rights to the United States ____________ guarantees certain individual freedoms. The
constitution also guarantees important rights that allow people to engage in business activities.
Property Rights
In many other countries the king or ruler has had the power to take people’s property for his own use.
Early Americans wanted to protect against this and protected it through the ______________. And the
14th amendment placed the same limitation on __________ governments….EXCEPT when there is a
_________ reason – and even then the government must pay the person ___________ of the property.

Basic Principles of Free Enterprise
In
a free enterprise system, business owners and managers control ____ activity and operate in ways
that will ____________________.
The
U.S has a tradition of open ________________, the concept that everyone can compete in the
marketplace.
They
also have the right __________, voluntary exchange and competition.
Consumers
Consumers make their desires known thorough their economic dealings with producers or by joining
________________.
Role of the Government
Americans expect _______________ from problems that affect us all, such as air ___________ or
unsafe foods or drugs. (EX: Peanut Butter)
Public ____________ laws require companies to give consumers important information about their
products. Consumers can ___________ the aspects of the products they are considering buying.
Blue Bell Creameries
In
1907 Brenham Creamery Company of Texas used excess cream in milk from area farms to make
_______. Four years later they began making ____ gallons of ice cream per day. In 1930 they
became known as Blue Bell after the Texas wildflower. The invention of _________ in the home
increased the demand for take-home products. The key move was Blue Bells decision to replace
butter with ice cream. Then Blue Bell launched its own ____________ company in 1987 and began
diversifying by making the first frozen dairy dessert made with NutraSweet. In the 1990’s they started
to cross state lines
Global Connection
Starting a new business in _________ is difficult. The average new business has to deal with on
average 25 agencies and up to ___ approved registration forms. Many businesses have to pay ______
to government officials for start-up licenses. Taxes are high, banks are reluctant to ______ money and
many monopolies and oligopolies control entire industries.
Protecting Health, Safety, and Well-Being
Although the government does not get involved in running private businesses, it does impose some
basic _____________.
Businesses must follow certain _____________protection rules. Starting in the 1960’s the federal
government became actively involved in economic matters of public interest.
Negative effects of Govt Regulation
Government
regulations can have a ____________ effect on both businesses and consumers. In the
60’s and 70’s government regulation cut into business _______, slowed ________ and forced
unnecessary high prices such as airlines and telephone companies.
In the 80’s & 90’s public pressure allowed ____________ of some businesses.
Prince of midair
Government
deregulation of airlines led to a fierce competition during the 80’s and 90’s. Herb
Kelleher made Southwest airlines stand apart from the competition. They deny assigned seats, refuse
to transfer baggage or arrange connections, only allow for crackers – and don’t fly to many large city
airports. Southwest began as a Texas puddle jumper and now has made money for 20 years and now
is in 34 cities and 15 states. The owner, Uncle Herb, dresses up as Elvis, paints his planes to resemble
whales, encourages flight attendants zany antics and awards passengers with the largest holes in their
socks!! He calls it his “gunh-ho” spirit.
Ch 3
Section 2 Promoting Growth and Stability
Macroeconomics is the study of the _________ and decision making of entire economies. This
looks at major trends for the economy as a __________.
Microeconomics is the study of the economic behavior and decision making of ______ units, such
as individual and families.
Micro
Macro
Unemployment in the US, unemployment in the aerospace industry, output of the U.S. economy,
number of computers produced in the US, trade of maple syrup between the U.S. and Canada, trade w/
the U.S. and all countries in the world, prices of all goods rise at a rapid rate, price of oil falls at a
rapid rate, inflation, the national debt, GMC bankruptcy, Circuit City bankruptcy…add 2 more each…
GDP
Gross domestic product is the _______value of all final goods and services produced in an economy.
Where we are in a given business ______ affects our lives every day. If the economy doesn’t create
enough jobs, high school graduates have trouble finding work. If prices _____, but income s don’t ,
our ability to buy what we need ________. The business cycle is a period in macroeconomic
expansion followed by a period of __________ (decline).
Promoting Economic Strength
The government wants to _______ the economy through _____ employment, steady growth, and
stable prices.
Do you expect to have a higher standard of living than past generations? ____________________
Employment, Growth, Stability, Economic Citizenship
One
aim of federal economic policy is to provide ______ for everyone who is able to work. An
unemployment rate between _____ is desirable. (TODAY ______________________________!)
______
is a measure of growth and each generation wants to do better than the last.
Stability gives
consumers, _________ and investors ____________ in the economy and in our
financial institution s. Price _________ are one indicator of stability. A surge in price puts a strain on
consumers. And a __________ in price hurts the _____________.
Citizens
must understand ___________ processes that shape our ________.
CPI v. PPI
Consumer Price Index measures ________ in the ________of consumer goods thus gauges inflation.
PPI measures a change in prices paid by ________of goods. A rise in PPI then signals a ____ CPI.
Technology and Productivity
productivity – shifting the production possibilities frontier __________ is the best way to
preserve a _______ standard of living. This is measured through the GDP and the American economy
maintains a high standard of living.
Increasing
One
way is through the American __________, a commitment to the value of work and purposeful
activity.
The
other is through technology; the process used to produce a good or service. Technology allows
an economy to produce more output from the same or smaller quantity of inputs or resources.
American history is full of ____________ improving productivity. Thomas Edison’s light bulb
invention in 1879 made it possible to work _______. Tractors, consumers, weaving looms made it
possible to generate _______ goods in a ________ amount of time with fewer raw materials.
Such inventions also make other products obsolete.
Name 3 products that are obsolete today…_____________________________________________
Government
Inventions are the core to the ___________ system. They help us build ______________ giving
consumers more economic choices. In order to increase this, governments provide ___________ for
innovations.
The time-tested way for governments to create jobs in a hurry is to pour money into old-fashioned
public works projects like roads and bridges. President Obama’s economic recovery plan will do that,
but it also has some ambitious 21st century twists.

The ______ billion stimulus plan presented this month by House Democrats called for $37 billion in
spending in three high-tech areas: $20 billion to computerize _____________, $11 billion to create
smarter ______________ and $6 billion to expand ________________ access in rural and
underserved communities.

A study published this month, which was prepared for the Obama transition team, concluded that
putting $30 billion into those _______fields could produce more than ____________ in the first year.
The mix of proposed spending is different in the House plan, but the results would be similar, said
Robert D. Atkinson, president of the Information Technology and Innovation Foundation, which did
the study.

Beyond creating jobs, advocates say, government investment in these technology fields holds the
promise of laying a lasting __________n for more business innovation and _____________, while
helping to create ______ digital industries.

“The
appeal of these kinds of investments is that you not only get the stimulative effect but also build
a platform for ___________ gains and long-term growth,” said Blair Levin, a former senior official at
the Federal Communications Commission who was a technology policy adviser on the Obama
transition team.
the standard for including any initiative in the economic recovery plan is that it be “timely,
targeted and temporary,” while also creating jobs, Mr. Levin said recently in an address to the
Congressional Internet Caucus, an advisory group. Not every ____________ in these technology
fields, he said, fits those criteria.
But
The technology industry is not typically viewed as a prolific job producer. Much of its manufacturing
is highly ___________. But bringing technology to services fields like health care,
telecommunications and energy can be labor intensive and thus generate jobs.

At the top of the jobs pyramid, the design of _____________ is done by scientists and engineers with
___________ degrees. The installing, tweaking and maintaining of that technology in specific
industries involve a far __________ base of workers with a range of training, skills and education.

“There is a huge implementation phase to the adoption and use of these kinds of technologies
locally,” said John Irons, an economist and research director at the labor-oriented Economic Policy
Institute in Washington. “The jobs involved do tend to span the spectrum of skills and income levels.
And they are not going to be ________________.”

The job-generation estimate by the Information Technology and Innovation Foundation translates
into more than 30,000 jobs created for each $1 billion of government investment — roughly similar to
projections for ______________ spending.

But
proponents of spending on digital infrastructure say the beneficial spillover effects are greater
than for conventional public works. The high-tech investments, they say, can be the contemporary
equivalent of federal financing for highways in the ________, which fostered the growth of businesses
like ___________ and national retail chains.
The
danger of such an approach, some economists warn, is that ________________ government
programs can tilt markets to the advantage of some companies and disadvantage of others, putting
Washington on the path of _________________________.
The
other criticism is that, while these projects may be worthy for the ___________, they should not
be part of a _____________ economic recovery plan.
What
do you think?
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