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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
economy.
 a. Explain why government provides
public goods and services, redistributes
income, protects property rights, and
resolves market failures.
Characteristics of Free
Enterprise
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Economic Freedom
Voluntary Exchange
Private Property Rights
Profit motive
Competition
Role of Consumers
 Decide WHAT is produced
By how they spend their money
 Spur new developments by changing
wants
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,
defense
 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
payments?
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
quiz
 What was I demonstrating when I said for
you to add a point if you were taller than
5’4.?
 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
payments.