Download Chapter 3 - Richfield High School

Chapter 3
America’s Free Enterprise
System
Constitutional
Protection
• Property Rights
5th Amendment
“be deprived of
life, liberty, or
property without
due process of
law: nor shall
private property
be taken for
public use
without just
• Taxation
16th Amendment
in 1913 first
gave Congress
the right to set a
tax on income.
Basic Principles
• Profit Motive
• Open opportunity= everyone can
compete
• Economic Rights= legal equity,
private property rights, free
contract, voluntary exchange,
competition
The Role of the
Government
• Disclosure Laws= warning
labels,
nutrition facts
• Protecting Health, Safety, Well
Being, and Environment
• Regulations (may hinder
business but look out for
consumers and workers
Major Regulatory
Agencies
• Food and Drug Administration
• Federal Trade Commission
• Federal Communications Commission
• Federal Aviations Administration
• Equal Employment Opportunity Commission
• Environmental Protection Agency
• Occupational Safety and Health Administration
• Consumer Product Safety Commission
• Nuclear Regulatory Commission
(These are ran by the Executive Branch of the Federal
Government)
Section 2 Promoting
Growth and Stability
• Macroeconomics is the study of
the entire economy
• Microeconomics is the study of
economic behavior of small
units, such as family, individual,
business
• Macro=Big
• Micro=Small
Business Cycles
• The economy is always in
periods of expansion followed
by periods of contraction
• Gross Domestic Product GDP is
used to measure growth
Government tries to
prevent huge swings in the
business cycle
Employment= tries to keep
unemployment between 4 and
6%
Growth= Continue to increase our
standard of living with new
goods and services
hard work
technology
Stability= prevent inflation and
Government Success
• Federal agencies fund Research
and Development (R&D)
• Land Grant Colleges= Federal
Government gave land for the
purpose of schools
• NASA= satellites, tang, Velcro
• Patents
What is a Public Goods
• It is a Public Good if it would be
inefficient or impractical to
• 1) to make consumers pay individually
pay for a percentage of a shuttle
launch or cleaning
of Mount
Rushmore
• 2) to exclude non payers
People that don’t pay for roads can’t use
them
• Public Sector
provides public
goods
(government)
• Private Sector
are all business
and individual
transaction
outside of the
government
Free Rider Problem
• Someone who would choose not
to pay, but would benefit from
the service
• Examples…..National Defense,
Firefighters
Externality is an economic side effect of a
good or service that effects someone that
did not make the decision
• Positive
Mrs. Garland
purchases a run
down home.
She fixes it up.
The neighbors
benefit from
increased
property value
• Negative
Mr. Fowler takes
up the
accordion. He
hold Polka
Party’s every
Friday. You hate
Polka Music
Section 4
Providing a Saftey
Net
Welfare
Term used for any
governent program
designed to assist the poor.
A Century of
Government Programs
• 1916-Workers
Comp
• 1933- Federal
Emergency
Relief
Administration
• 1935-Social
Security
• 1950- extend
social securty
• 1965-create
Medicare
• 1974-Food
Stamp Program
• 1996 Temporary
Assistance for
Needy Programs
(Welfare Reform)