Download Unit-10-Study

The United States Economy
Virginia Standards of Learning
CE.11 The student will demonstrate knowledge of how
economic decisions are made in the marketplace by
b) comparing the differences among traditional, free
market, command, and mixed economies;
c) describing the characteristics of the United States
economy, including limited government, private property,
profit, and competition.
CE.12 The student will demonstrate knowledge of the
structure and operation of the United States economy by
a) describing the types of business organizations and the
role of entrepreneurship;
Student objectives
• Compare traditional, free market, command,
and mixed economies. (CE.11b)
• Describe the characteristics of the U. S.
economy. (CE.11c)
• Describe the types of business organizations
and the role of entrepreneurship. (CE.12a)
What are the fundamental
economic questions?
1. What to produce and how to produce it
2. How much to produce
3. For whom to produce
List two primary characteristics of a
traditional economy.
1. Economic decisions are based on
custom or historical precedent
2. People perform the same type of work as
their ancestors, regardless of ability or
potential
List six characteristics of a free
market economy.
1.
2.
3.
4.
5.
6.
Private ownership of property/resources
Profit motive
Competition
Consumer sovereignty
Individual choice
Minimal government involvement in the
economy
List three characteristics of a
command economy.
1. Central ownership of property and
resources
2. Centrally-planned economy
3. Lack of consumer choice
List four characteristics of a mixed
economy.
1. Individuals and citizens are decision
makers for the private sector.
2. Government is the decision maker for the
public sector.
3. Government’s role is greater than free
market and less than in a command
economy.
4. No country relies exclusively on markets
to deal with resource allocation.
List five characteristics of the
United States economy.
1. Free markets in which supply and demand
determine price and resource allocation
2. Private property – capital is owned by
individuals and businesses
3. Profit motive – individuals work to make money
(profit)
4. Competition – business rivalries lead to low
prices, better quality, and efficiency
5. Consumer sovereignty – consumers determine
through purchases what gets produced
Explain the following terms:
Profit
Money left over from revenues after
all expenses have been paid
Consumer sovereignty
People are free to decide what to buy
and what price they are willing to pay,
this determines what goods and
services get produced
Public sector
That which is owned and controlled by
the government
Private sector
That which is owned and controlled by
individual citizens and businesses
Free markets
Markets that are allowed to operate
without undue government interference
Resource allocation
The distribution of scarce resources in an
economy
Entrepreneur
A person who takes a risk to invest capital
in order to seek profits
List the three factors of production.
1. Human resources – people who work
2. Natural resources – raw materials that
come from nature (wood, water, etc.)
3. Capital resources – land, factories,
machines, tools, and money used in
production
Describe the contributions of each
of the following economists.
Adam Smith
• Free market
capitalism (“laissezfaire”)
• The power of selfinterest
• Allow citizens to own
capital resources
• Wrote The Wealth of
Nations
Karl Marx
• Critic of capitalism
• Predicted a volatile
business cycle,
monopolies, and wide
income distribution
• Wrote The
Communist Manifesto
John Maynard Keynes
• Outlined a successful
way to regulate a
capitalist economy
• Monetary policy – control
the amount of money in
circulation
• Fiscal policy – control
government spending to
regulate the economy
List and describe the basic types of
business ownership.
Sole proprietorship
A type of business owned by one person
who takes all of the risk and all of the
profits
List and describe the basic types of
business ownership.
Partnership
A type of business with two or more owners
who share the risk and the profits
List and describe the basic types of
business ownership.
Corporation
A type of business organization with many
owners (stockholders) whose liability is
limited to their investment. A corporation
is regarded legally as a single person.
What type of economy is being
described below:
•
•
•
•
•
Consumer sovereignty
Minimal government influence
Profit motive
Competition
Private property
What type of economy is being
described below:
• Lack of consumer choice
• Centrally-planned economy
• Government ownership of
property and resources
Command
What country exhibits all of the
characteristics of a free market
economy?
United States
of America
These people are all examples of
what kind of person?
What Scottish philosopher first
recommended the following:
•
•
•
•
Private property
Free markets
Laissez-faire
The Wealth of
Nations
• Self-interest
Adam Smith
What German economist predicted
the following?
• Volatile business cycle
• Monopoly tendency
• Wide income distribution
Karl Marx
What economist suggested that you
could regulate a free market
economy by controlling the money
supply and government spending?
John Maynard Keynes
What type of business is characterized
by the following terms?
•
•
•
•
•
Limited liability
Stockholders
Status of an individual
Large and complex
More government regulation
Corporation
Complete an A to Z Sheet About
The U. S. Economy