Chapter 3: American Free Enterprise
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Transcript Chapter 3: American Free Enterprise
CHAPTER 3: AMERICAN FREE
ENTERPRISE
S.1: Benefits of Free Enterprise
S.2: Promoting Growth and Stability
S.3: Providing Public Goods
S.4: Providing a safety net
SECTION 1: BENEFITS OF A FREE
ENTERPRISE
BELL WORK
Bell Work: 1st Ten Minutes
Grab sheets from back (3 hole and insert)
Complete Ch. 3 Warm-up on pg. 21 of
wrkbk
Copy Chart @ beginning of Ch.3
S.1: BENEFITS OF FREE ENTERPRISE
“What
are the benefits of free
enterprise?”
Top of S.1 Notes
Learning Objectives
Basic principles of U.S. free enterprise system
Role of consumer in American economy
Constitutional protections underlying free enterprise
Why could/will govt. intervene in marketplace
Key Terms
http://www.pearsonsuccessnet.com/snpapp/iText/products/0-13369833-5/Flash/Ch03/Econ_OnlineLectureNotes_ch3_s1.swf
INTRODUCTION
What are the benefits
of free enterprise?
Makes it possible for
people who have ideas
& persistence to start
businesses and find
success
Offers great deal of
economic freedom to
consumer
WHAT IS FREE ENTERPRISE?
U.S. considered to be “land of opportunity”
American tradition of Free Enterprise has been key
supporter of this
Characteristics
Profit motive: Key incentive; all decisions are made
w/ idea of increasing profit
Open opportunity: Anyone can participate in market
Legal Equity: Everyone has same legal rights….now..
Private Property: Own decisions about own property
Freedom to buy/sell: Own decisions about entering
agreements, and what/when/how to buy/sell
ROLE OF THE CONSUMER
Freedom to make own
economic choices
Voluntary exchanges
happen so businesses
know what and how
much to produce
Interest groups
Consumers can join
them to encourage
public officials to act
in ways to benefit
them
ECONOMIC FREEDOM & CONSTITUTION
Free enterprise is written into
the constitution
5th Am.: Protects private property
from being taken w/out due
process
Spells out how govt. can tax
people/businesses
Even though govt. can take land
for public reason
Eminent Domain: but have to
pay fair price
Art. I: Congress can levy taxes
Income tax didn’t happen till
16th am.
Guarantees people/businesses
right to make contracts
ROLE OF THE GOVT. IN MARKETPLACE
Govt. has many roles
Carrying out constitutional responsibilities to protect
rights, contracts, and other business activities
Making sure that producers provide consumers with
information
Protecting the health, safety, and well-being of
consumers
NEGATIVE EFFECTS OF REGULATION
Rules are costly to
implement
Regulations stifle
competition
Govt. spending
increased in industries
b/c have to hire workers
to do actual oversight
MAJOR FEDERAL REGULATORY AGENCIES
Identify one agency set
up to protect
Public Safety
FDA
FAA
CPSC
Fair competition
FTC
FDIC
Equality
EEOC
How do you think the
FCC promotes the public
interests?
Making sure broadcast
communication conforms
to standards so consumers
can receive signals
LESSON CLOSING
Complete Workbook pages
22: Free Enterprise and Govt.
103: Eminent Domain
HW: Read Sect. 3
SECTION 2: PROMOTING
GROWTH/STABILITY
Bell Work
Complete Chart atop pg. 56
Watch “How Economy Works”
Use completed chart pg.49 to discuss
benefits of Free Enterprise (have ready to talk)
3.2: PROMOTING GROWTH/STABILITY
“How
does U.S. Govt. promote
growth/Stability?”
top of notes
Learning objectives
Why govt.s track and seek to influence business
cycles
How the gov.t promotes economic strength
What factors increase productivity
Key Terms
http://www.pearsonsuccessnet.com/snpapp/iText/products/0-13369833-5/Flash/Ch03/Econ_OnlineLectureNotes_ch3_s2.swf
INTRODUCTION
How does the U.S.
Govt. encourage
growth/stability?
Tracking Business
Cycles
Promoting High
employment
Keeping prices stable
Encouraging
development of new
technologies
Pride in American
Work ethic
TRACKING BUSINESS CYCLES
Govt. often intervenes to influence
macroeconomic trends
One measurement of well-being is GDP
Gross Domestic Product
Measurement of total goods/services produced in year
Business Cycle: pattern of expansion followed by
contraction
Expansion
GDP goes up
Contraction
GDP goes down
Why do govt experts track the business cycle?
So they can see where country is and make
predictions
PROMOTING ECONOMIC STRENGTH
High Employment
Economic Growth
Govt. works to ensure jobs for everyone available
4-6% unemployment is healthy
To help spur growth, govt. can cut taxes or increase spending
Stability and Security
One indicator can be price levels, another is banks/financial
institutions
Government looks to prevent sudden shifts in prices to avoid
consumer/producer suffering
Govt. Regulations seek to keep banks/financial inst.’s stable;
think bailout!!
Economic Citizenship
Voters have a say in promoting economic strength by:
Voting for public officials
Voting on referendums
TECHNOLOGY AND PRODUCTIVITY
How does tech improvement
help economy?
Allows economy to operate more
efficiently
Helps increase productivity
Light bulb made longer
workdays
Assembly line: mass production
Govt.s promote
innovation/invention to
maintain a technological
advantage by:
Funding R & D projects @
universities
Est. own research institutions:
NASA
Grant patents/copyrights,
incentives to innovation
AMERICAN WORK ETHIC
Growth cannot occur w/out
indiv. Effort
Americans have pride in
strong work ethic, not only
ethic but the work they do
Work ethic has long been
seen as a key ingredient in
U.S.’s success
LESSON CLOSING
Workbook pages 23, 108
Watch Case Study Video
Wall street Edition
HW: Read Section 3
SECTION 3
Bell Work: During Europe Video over
Unemployment
Copy down chart on pg. 62
Fill in chart from pg. 56
Finish 23, 108 from Workbook
SECTION 3
“Why
does a society provide
public goods?”
Objectives
Examples of Public Goods
Understand market failures
How govt.s allocate resources to manage externalities
Key Terms
http://www.pearsonsuccessnet.com/snpapp/iText/produc
ts/0-13-3698335/Flash/Ch03/Econ_OnlineLectureNotes_ch3_s3.swf
INTRODUCTION
Why does a society
provide public goods?
B/C it would be
inefficient/impractical
for a free market to
provide them
PUBLIC GOODS
Shared good/service that
would be
inefficient/impractical to
make consumers pay for or to
exclude those who can’t
Maintaining Streets is one
example
Signs, lights, conditions, etc.
Used by any # of people w/out
reducing its benefits
Financed by public
Police, firefighters, etc.
PUBLIC GOODS: COSTS/BENEFITS
What 2 Criteria must
be present for a public
good?
Benefit is less than cost
each individual would
have to pay if privately
provided
Total Benefits to society
are greater than total
cost
PUBLIC GOODS: COSTS/BENEFITS
Govt. pays for public
goods through…….
Taxes
Financial burden
become much less
than if private funded
PUBLIC GOODS: FREE RIDER PROBLEM
“Free Riders”
People not willing to pay for certain good/service but would
benefit from its offering as public good
Government stops providing public good
Instead relying on “donations/contributions
Some people would “refuse” to pay and many services would be
eliminated
Examples
National Roads
Pay for a road in Florida/Texas? RIGHT!!
But you would benefit from easier trucking routes/vacations
Firefighting
Not everyone would pay for fire protection.
Neighbors could spread to yours and they don’t pay for it?
Provided as public good!
MARKET FAILURES: READ SECTION
Why are public goods an
example of market
failure?
Shows where the free
market does not
distribute resources
efficiently
Example: Building roads.
How many people could
afford to privately pay for
road usage and to build
roads
EXTERNALITIES: ECONOMIC SIDE-EFFECTS
Positive Externalities
Benefits of public
goods
Allow someone who
didn’t purchase a good
to enjoy part of
benefits
Negative Externalities
Cause part of the cost of
producing good/service
Paid by someone other
than producer
Look at 3.3 pg. 66
Answer 2 ?s
GOVERNMENT GOALS
Understanding externalities helps us see the
roles that govt. plays in U.S. economy
Takes action to create positive externalities
Takes actions to limit negative externalities
Improving education
Pollution, health issues.
Many economists feel the private sector produces
more pos. externalities than the govt.
“With less” regulation companies wouldn’t eat as
much money in costs meeting them, but would also
be encouraged to find their own methods of better
meeting broad requirements.
Just an argument though, pros/cons for each side
LESSON CLOSING
Find a partner that you do not sit by
Work on pg. 114 with them.
When finished complete page 24 in workbook
with same partner or on own
Fill in rest of pg. 62 Chart
HW: Pre-read sect. 4
SECTION 4
Bell Work
Finish Chart from Section 3
Copy Chart from Section 4
Create 10 Vocab cards that you can quiz a
partner on later. Use sheets in front. Due
tomorrow
S.4: PROVIDING A SAFETY NET
“How
does Government help the
poor?”
Objectives
Understand U.S. debate on ways to fight poverty
See main programs to redistribute wealth
How govt. encourages private efforts to help needy
Key Terms
http://www.pearsonsuccessnet.com/snpapp/iText/prod
ucts/0-13-3698335/Flash/Ch03/Econ_OnlineLectureNotes_ch3_s4.swf
INTRODUCTION
How does the government help the poor?
To help the poor govt. programs take money from
some people and redistribute it to others
Program examples:
Welfare system
Cash transfers
In-kind benefits
Medical Benefits
Educational benefits
Grant Money
POVERTY PROBLEM
Problem
Free markets create uneven wealth distribution
Poverty “threshold” is set based on the cost of goods a
family NEEDS to buy
Governments Role
Provides a safety net to groups through federal, state,
and local govt. programs
Young, old, sick, poor, disabled
Welfare Program
Collects funds from taxpayers to redistribute money to
needy
Began during……?
Great Depression
WELFARE REFORM
Critics of welfare
Claim it discourages productivity and furthers
poverty
1996 new reforms limited amount of time people
could receive welfare
Also gave states more freedom to experiment w/anti-poverty
programs
REDISTRIBUTION PROGRAMS
Cash Transfer Programs
(TANF) Temporary Assistance
for Needy Families
Welfare payments to states who
run own programs
Social Security- Collects money
from current workers and
redistributes to retired/disabled
people
Unemployment InsuranceProvides $$ to workers who lost
jobs; need to proof making effort
to work
Temporary: 26 weeks in most
states
Workers compensation- Provides
state funds to workers injured on
the job
IN-KIND BENEFITS
Govt. provides poor
people w/ benefits
Food stamps
Subsidized housing
Assistance for food
Less $ for rent
Legal aid
No charge legal advice
MEDICAL AND EDUCATIONAL BENEFITS
Govt. provides health care to…..
Elderly (Medicare)
Disabled/poor (Medicaid)
Uninsured children (SCHIP)
Govt. funds educational programs from preschool to college
Cheaper State colleges, reduced lunch, free-preschool
ENCOURAGING PRIVATE ACTION
How does tax law provide an incentive to help the
needy?
Read section on pg. 72
Federal tax laws allow individuals/corporations tax
deductions for charities
Government can also provide grants/other assistance
to organizations that provide social services
LESSON CLOSING
Workbook pages 25-27, 124
Work w/partner away from you
Finish page. 31 of Unit Packet (started in ch.1)
This is your basis for Unit 1 Essay on test
Review for test Monday
Test Tuesday
Tomorrow GDP Activity