Unit 1: Lecture 3

American Free Enterprise System

What economic traditions do we have in the USA?

Land of Opportunity Open Land Natural Resources Steady flow of Immigration

Constitution Protections for the American Dream Property Rights under the 5th Amendment

DUE PROCESS Taxation

BASED ON INCOMEOBLIGATION OF CONTRACTS

1. Profit Motive

2. Open opportunity

3. Economic Rights

What are the Basic Principles of the Free Enterprise System?

What role does the consumer play in the system of free enterprise?

Consumers Dictate the Market

Interest Groups

Does the government have any control over goods and services in a free enterprise system?

Public Disclosure Laws Public Interest

How does the government track and seek to influence business cycles?

Macroeconomics Gross Domestic

Product Microeconomics

Business Cycle

How does the government try to promote economic

strength? Employment Growth Stability Economic Citizenship

Why and how does the

government encourage

innovation?

TECHNO

LOG

Y

What are public goods?

A public good is a shared good or service for which it would be impractical to make consumers pay individually and to exclude non-payers.

Public Sector Free Rider

Market Failure

How does government manage 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.

What role does the government play in fighting poverty?

Poverty Threshold

How is it calculated?

Welfare

What government programs attempt to aid those facing poverty?

Redistribution Programs

• Cash transfers Temporary Assistance for Needy Families (TANF) Social Security Workers’ Compensation

Other Types of Redistribution Programs In-Kind benefits Medical Benefits Education Benefits

Unit 1: Lecture 3 (Chapter 3 L.R.Q.s)

1) How does the constitution promote free enterprise?

2) What are the 3 basic principles of the Free Enterprise system?

3) How could the consumer both negatively and positively effect the free enterprise system?

4) What is the role of the government in the free enterprise system?

5) What happened to the public good when Market failure occurs?

6) How do externalities effect the economy?

7) What stereotypes arise in a free enterprise system about poverty?

8) How does the United States government use our economy to balance the level of poverty in the USA?