Transcript 3.2 Regulating the Private Sector

Standard Address:
 12.1 Students understand common
terms & concepts and economics
reasoning.
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Objectives
LESSON 3.2
Regulating the Private Sector
 Explain how government, by establishing laws
and regulations, can improve operation of the
private sector.
 Distinguish between regulations that promote
competition and those that control natural
monopolies.
 Describe how fiscal policy and monetary policy
reduce the ups and down of the business cycle.
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Key Terms
LESSON 3.2
Regulating the Private Sector
 private property rights
 antitrust laws
 natural monopoly
 fiscal policy
 monetary policy
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Rules for a Market Economy
Establish property rights
Intellectual property rights
Measurement and safety
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Establishing Property Rights
Private property rights guarantee
individuals the right to use their
resources as they choose or to charge
others for the use.
Governments play a role in safeguarding
private property by establishing legal
rights of ownership.
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Intellectual Property Rights
Laws also grant property rights to the
creators of new ideas and new
inventions.
Patent
Copyright
Trademark
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Measurement and Safety
U.S. Bureau of Weights and Measures
The U.S. Food and Drug Administration
(FDA)
The U.S. Department of Agriculture
The Consumer Product Safety
Commission
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Checkpoint: Pg70
How can laws and regulations improve
the operation of the private sector?
 Laws and regulations improve the
operation of the private sector by
providing a standard that everyone must
meet and abide by.
 They allow the private sector to operate
with order and fairness.
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Market Competition
and Natural Monopolies
Adam Smith’s argument that the invisible
hand of market competition harnesses
self-interest to promote the general good.
A business owner would prefer to be a
monopolist – that is, to be the only seller
a product.
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Market Competition
and Natural Monopolies
Promoting market competition
Antitrust laws attempt to promote
competition and reduce anticompetitive
behavior.
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Market Competition
and Natural Monopolies
Regulating natural monopolies
When it is cheaper for one firm to serve the
market than for two or more firms to do so,
that firm is called a natural monopoly.
Government-owned and governmentregulated monopolies are called public
utilities.
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Checkpoint: Pg71
Why does government promote competition in some
markets and control natural monopolies in others?
 Government promotes competition in some
industries, such as retail, because the industry
operates more efficiently under competition.
 In other cases, such as utilities, government
promotes natural monopolies because the industry
operates more efficiently in monopolies .
 For industries that require regulation, it is easier for
the government to provide that regulation in a
monopoly setting.
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Growth and Stability
of the U.S. Economy
Fiscal policy uses taxing and public
spending to influence national economic
variables.
When economist study fiscal policy, they
usually focus on the federal government,
although governments at all levels effect
the economy.
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Growth and Stability
of the U.S. Economy
Monetary policy tries to supply the
appropriate amount of money to help
stabilize the business cycle and promote
healthy economic growth.
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Checkpoint: Pg72
How do fiscal policy and monetary policy
reduce the ups and down of the business
cycle?
 Fiscal policy works by allowing the government
to offset a slowdown in economic activity in the
private sector by cutting taxes to stimulate
consumption and investment.
 The Monetary policy works by putting more
money into circulation during slow economic
times to lower interest rates and encourage
borrowing and spending.
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CONTEMPORARY ECONOMICS: LESSON 3.2
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CONTEMPORARY ECONOMICS: LESSON 3.2
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Assessment
Key Concepts
#1.
#2.
#3.
#4.
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CONTEMPORARY ECONOMICS: LESSON 3.1
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Key Concepts
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Assessment
CONTEMPORARY ECONOMICS: LESSON 3.1
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Assessment
Key Concepts
#5.
Faster growth in money seems to
cause lower interest rates, while
slower growth or decline in
money casue higher interests
rates.
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CONTEMPORARY ECONOMICS: LESSON 3.1
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