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Free Enterprise
The United States economic system
is based on the free enterprise
system and is characterized by
competition and private ownership
of resources
Standard Correlation
 SSEF5 The student will describe the
roles of government in a market
 a. Explain why government provides
public goods and services, redistributes
income, protects property rights, and
resolves market failures.
Characteristics of Free
Economic Freedom
Voluntary Exchange
Private Property Rights
Profit motive
Role of Consumers
 Decide WHAT is produced
By how they spend their money
 Spur new developments by changing
Role of Entrepreneurs
 Organize productive resources to
make profit
 Accept risk of loss
 Decide HOW to Produce
Role of Government
 Protector – provide and enforce laws,
protect against false advertising, environ.
Hazards, employee discrimination
 Provider – public goods and services
education, highways, public welfare, parks,
 Regulator – preserve competition in market
– prevent mergers if necessary, regulate
communications and interstate commerce
 Consumer – consume goods and services
 Personal distribution of income –
income received before taxes
 Transfer payments – can be cash
in in-kind (non-cash) benefits
such as food stamps, housing
subsidies, or gifts between family
and friends.
Discuss these questions with
your vocabulary partner.
 Name some cash transfer payments you
have heard about.
 Name some in-kind transfer payments
you have heard about.
 Why do you think the federal
government distributes monetary and
non-monetary payments?
 Which adjustments made on the class
quizzes would parallel cash transfer
People’s incomes differ.
Why? – discuss these with
the same person
 Why were some student scores higher
than others?
 Does level of education make a difference
in people’s incomes?
 Do people who perform unpleasant or
dangerous jobs earn more income?
 Is all income earned from work?
 Are some people rich or poor because
they are lucky or unlucky?
Back to the point of the
 What was I demonstrating when I said for
you to add a point if you were taller than
 What about age?
 What about when I gave points to the F’s
and took points from the A’s and B’s?
Progressive Tax System
 Transfer payments redistribute income from the
rich to the poor.
 Our income taxes also redistribute income from
the rich to the poor.
 People with higher incomes pay a larger
percentage in income taxes than people with
lower incomes.
 Low income taxpayers receive tax credits (they
are taxed less) as well as government transfer