Chapter 2

1.ECONOMIC FREEDOM- FREEDOM TO MAKE OUR OWN ECONOMIC CHOICES

CHOOSE YOUR OWN OCCUPATION, EMPLOYER, HOW TO SPEND MONEY

2. ECONOMIC EFFICIENCY- RESOURCES ARE SCARCE AND MUST BE USED EFFICIENTYLY, NO WASTING BECAUSE WE CAN NOT FULFILL NEED AND WANTS

3. ECONOMIC EQUITY- EQUAL PAY FOR EQUAL WORK, ILLEGAL TO DISCRIMINATE ON BASIS OF AGE, SEX ETC.,

4. ECONOMIC SECURITY- WE ARE PROTECTED WHEN WE GET LAYED OFF OR ILL

INSURANCE PLANS, EXAMPLE: SOCIAL SECURITY

5. FULL EMPLOYMENT- PEOPLE WORK TOGETHER TO CREATE JOBS ETC

LOW UNEMPLOYMENY RATE 6. PRICE STABILITY, WHEN WE DON’T

HAVE: INFLATION, INCREASE IN PRICES BUT NOT IN

PAY FIXED INCOME, INCOME THAT DOES NOT

INCREASE EVEN WHEN THE PRICES GO UP

7. ECONOMIC GROWTH- HOPE TO BETTER YOUR LIFE

IMPROVED JOBS, MAKE MORE MONEY, BIGGER HOUSE ETC.

WHAT OTHER PROGRAMS CAN WE ADD TO IMPROVE OUR LIVES TODAY? ENVIRONMENTAL PROTECTION ENDANGERED SPECIES ??????

How important is it for you to have choices?

What choices can you make? When and what choices are denied to

you?

EVERY SOCIETY, NO MATTER HOW LARGE OR SMALL, HAS AN ECONOMIC SYSTEM

AN ECONOMIC SYSTEM IS AN ORGANIZED WAY OF PROVIDING FOR THE NEEDS AND WANTS OF THEIR PEOPLE

1. TRADITIONAL- BASED ON HABITS, RITUALS, AND CUSTOMS

EXAMPLES: INUIT OF CANADA, LIVE LIFE PASSED DOWN FROM GENERATION TO GENERATION

PARENTS TEACH THEIR CHILDREN HOW TO SURVIVE

ALIMONY???

STRENGTHS- EVERYONE KNOWS THEIR ROLE

THREE QUESTIONS OF PRODUCTION ARE EASILY ANSWERED

WEAKNESSES- DISCOURAGES NEW IDEAS, MAY EVEN PUNISH THOSE THAT BREAK THE RULES (VILLAGE)

LACKS PROGRESS WHICH LEADS TO LOWER STANDARD OF LIVING

What would happen if you were guaranteed an A in economics class?

What would happen if you were guaranteed a certain pay no matter how much they produced?

2. COMMAND SOCIETY- IS WHEN THERE IS A CENTRAL AUTHORITY OR SMALL GROUP AT THE TOP THAT MAKE THE DECISIONS FOR THE WHAT, HOW, FOR WHOM AND PEOPLE JUST EXPECTED TO FOLLOW THEM

EXAMPLES: NORTH KOREA, PEOPLE’S REPUBLIC OF CHINA, FORMER SOVIET UNION, Cuba

STRENGTH, THEY CAN CHANGE FOCUS OVER A SHORT PERIOD OF TIME

EXAMPLE: SOVIET UNION WENT FROM AN AGRICULTURAL SOCIETY TO AN INDUSTRIAL SOCIETY IN JUST A FEW YEARS

THEY IGNORE CONSUMER GOODS

WEAKNESSES ARE OBVIOUS: NOT DESIGNED TO MEET THE NEEDS AND WANTS OF THE INDIVIDUAL (NO CARS ETC) SCARFICE FOR THE GOOD OF THE COUNTRY

LACKS INCENTIVES FOR PEOPLE TO WORK HARDER

NO MATTER HOW HARD WORK OR WHAT YOU DO, SAME PAY

NO INCENTIVE TO MOVE UP, BARE MINIMUM NO FLEXIBILITY TO DEAL EVERYDAY

SITUATIONS, NO NEW IDEAS

MARKET ECONOMY- PEOPLE AND FIRMS WORK IN THEIR OWN BEST INTERST AND THEY ANSWER THE WHAT, HOW AND FOR WHOM

CAN ADJUST TO CHANGE, EXAMPLE: GAS CHANGE IS NEVER PROHIBITED FREEDOM FOR EVERYONE, PRODUCERS

AND CONSUMERS RELATIVELY SMALL AMOUNT OF

GOVERNMENT INTERFERENCE, EXCEPT IN CERTAIN AREAS LIKE NATIONAL DEFENSE

CONSUMER SATISFACTION, WIDE RANGE OF PRODUCTS

THE YOUNG, SICK AND OLD WOULD HAVE A HARD TIME WITHOUT THE HELP OF THE GOVERNMENT

THEY DON’T WORK WELL ALL THE TIME, THINGS NEED TO BE IN PLACE

WORK BEST: 1. MARKET MUST BE REASONABLE 2. RESOURCES NEED TO BE FREE MOVING,

EXAMPLE: CHANGE JOBS 3. EVERYONE NEEDS TO KNOW

ALTERNATIVES TO MAKE CHOICES

Most economies today are a mixture of the three types of economies

Identify traditional, market and command elements in our society.

OUR ECONOMY, A MARKET ECONOMY IS BASED ON THE IDEA OF CAPITALISM

PRIVATE CITIZENS OWN THE FACTORS OF PRODUCTION, AND THEY ARE???

ANOTHER WAY TO SAY AMERICA, IS FREE ENTERPRISE, MARKET COMPETITION WITH MINIMUM GOVERNMENT INTERFERENCE

1. ECONOMIC FREEDOM, WE HAVE THE RIGHT TO WORK WHERE WE WANT, SPEND HOW WE WANT, LIVE WHERE WE WANT ETC.

2. VOLUNTARY EXCHANGE, BUYERS AND SELLERS ACT FREELY IN THE MARKET, YOU CAN DEPOSIT YOUR MONEY IN THE BANK, UNDER A MATRESS ETC.I CAN MAKE ALL THE WEEBLES I WANT, HURRAY!!!!

3. PRIVATE PROPERTY RIGHTS, WE HAVE THE RIGHT TO CONTROL AND OWN OUR PROPERTY, GIVES PEOPLE INCENTIVE

MORE MORE MORE MORE 4. PROFIT MOTIVE, WE ARE FREE TO RISK

ANY PART OF OUR MONEY IN A BANK, STOCK GAMBLE ETC.

PROFIT IS THE DRIVING FORCE IN OUR SOCIETY, BECAUSE PEOPLE WANT TO IMPROVE THEIR MATERIAL WELL BEING

5. COMPETITION, OH THE IMPORTTANT ONE

THIS IS THE STRUGGLE BETWEEN SELLERS TO ATTRACT CUSTOMERS

THIS IS WHY WE HAVE LOWER PRICES, AND A LOT OF GOODS AND SERVICES

THEY START NEW BUSINESSES THEY CREATE WEALTH WHEN THEY ARE SUCCESSFUL, PEOPLE ARE

HAPPY

AN ENTREPRENEUR REWARDS THEMSELVES, OKAY, BUT THEN WORKERS ARE REWARDED WITH BETTER JOBS, THE GOVERNMENT IS REWARDED WITH TAXES, MORE OF THE SAME ENTREPRENEURS COME OUT TO ATTRACT CUSTOMERS

WHEN WE PURCHASE WE VOTE, RIGHT?

CONSUMER SOVEREIGNTY DESCRIBES THE ROLE OF THE CONSUMER, THE RULER OF THE MARKET, THE DECIDER OF ALL DECIDERERS???

1. THEY SERVE AS OUR PROTECTOR, UH YA, NATIONAL DEFENSE

2. PROVIDER AND CONSUMER, DO YOU WANT TO CLEAN YOUR SEWER?? THEY PROVIDE GOODS AND SERVICES SUCH AS UTILITIES, EDUCATION, PARKS PUBLIC WELFARE ETC.

3. REGULATOR, THEY OVERSEE PROBLEMS WITH INTERSTATE COMMERCE, BANKING INDUSTRY, NUCLEAR POWER, ZONING PERMITS ETC.

4. PROMOTER OF NATIONAL GOALS, HELPS WITH EFFICIENCY, FULL EMPLOYMENT, SECURITY ETC.

OFFICIALLY THE UNITED STATES IS A MIXED ECONOMY, WHICH MEANS THAT WE ARE BASICALLY FREE TO COME AND GO BUT ARE SUBJECT TO SOME GOVERNMENT REGULATION