Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
American Free Enterprise Standards • Standard 15 – Students will understand that: Investment in factories, machinery, new technology, and the health, education, and training of people can raise future standards of living • Standard 16 – Students will understand that: There is an economic role for government to play in the market economy whenever the benefits of a government policy outweigh its cost. Governments often provide for national defense, define and protect property rights, and attempt to make markets more competitive. Most government policies also redistribute income Benefits of Free Enterprise Chap 3.1 Benefits of Free Enterprise • America is considered the land of opportunity • There are millions of companies, many started by a single entrepreneur with an idea • The tradition of free enterprise and Constitutional protection have encouraged people to engage in business ventures The Constitution • The Fifth Amendment promises to protest people’s property • The Fourteenth Amendment prevents the government from taking your property • The Sixteenth Amendment allows the government to tax people based on their income • The Constitution also guarantees binding contracts and protects patents for 20 years Principles of Free Enterprise • The profit motive encourages people to be more efficient, it encourages innovation • Anyone can compete in the market place and there is economic mobility • The government guarantees everyone has equal rights which maximizes human capital • Private property rights allows individual to make decisions about their own property • Free contracts allow people to engage in any contract agreement • Competition then lowers the cost for consumers The Government • Responsible for: a) protecting the Constitutional rights of people b) protect all the people from major issues like regulating drugs, pollution, unsafe foods c) make sure consumers tell the truth about products – disclosure laws d) operate regulatory agencies • Negative effects: a) too much regulating reduces competition and raises costs b) Increasing government oversight has cost a great deal of money Growth and Stabilty Chap 3.2 Promoting Growth and Stability • The American economy is one of the largest • Macroeconomics deals with behavior and decisions concerning entire economies • Microeconomics deals with behavior and decisions concerning individuals, families, and businesses • The government tries to prevent wild swings in the business cycle Factors for Growth • The governments has three objectives in stabilizing the economy: 1. High employment – a rate between 4%-6% is acceptable 2. Steady growth – the economy must provide more goods and services to grow. Measured by the GDP 3. Stability – the government wants the economy to be: a) stable to make investors happy, b) prices to be relatively stable, c) people to have confidence in their banks Measuring Standard of Living • Gross Domestic Product (GDP) – Total dollar value of all goods and services produced in a country in any one (calendar) year. – Not a good measure because it is different in different countries – In Europe they include prostitution and Black market – In China it is huge deal – measures success, but leads to “ghost cities” • GDP per capita = GDP / Population – much better, but still problematic Public Goods Chap 3.3 Public Goods • The government usually provides shared goods such as roads or dams because individuals could not • Cost is the main factor in determining the production of a public good total benefits to society must be greater than real cost • Public goods are financed by the public sector • The main problem with public goods is free riders, this is an example of market failure Public Goods Externalities • An externality is an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume. – The building of a new dam and creation of a lake generates: • Positive Externalities – – – – – A possible source of hydroelectric power Swimming Boating Fishing Lakefront views • Negative Externalities – – – – Loss of wildlife habitat due to flooding Disruption of fish migration along the river Overcrowding due to tourism Noise from racing boats and other watercraft • Externalities are market failures because the cost or benefit of a good or service is not assigned properly • The government encourages positive externalities and discourages negative externalities Safety Nets Chap 3.4 Poverty • The state of being poor • Despite one of the strongest economies in the world, the United States has not eliminated poverty • In fact, free enterprise has created enormous wealth but also huge problems associated with poverty • The poverty threshold in 2012 is $23,050 for a family of four Poverty • In 2012 the poverty rate was 15% with 46.5 million people living in poverty • The poverty rate for children under 18 was 21% • The 2011 poverty rate for white people in Georgia is 11.2% • The 2011 poverty rate for African Americans in Georgia is 24.7% The Safety Net • Free market economies create disparities of wealth - winners and losers • a) 16% of population live in poverty b) in 2011, 1.2% lived on less than $2 a day per household – extreme poverty c) in 2009, 643,000 homeless people • Federal, state, and local organizations try to help, especially the young and the old • Cash transfers are payments of money to the poor Welfare Programs – TANF: cash payments for poor families – Social Security: cash for elderly, disabled, and survivors of workers – Unemployment: cash for those who lost their jobs – Workers’ comp: cash when injured on the job – In-kind Benefits: Goods and services given to poor (food stamps, reduced rent) – Medical Benefits: Medicare, medicaid – Education: public education, grants for college