WRITE FIVE SENTENCES ABOUT HOW YOU FEEL ABOUT YOUR PERFORMANCE IN THE CLASS SO

FAR.

Bellwork

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE,

EFFICIENT, AND GROWING ECONOMY?

Chapter 3American Free Enterprise

Chapter Objectives

- Describe the tradition of free enterprise in the US

- Explain the basic principles of the free enterprise system

- Identify the roles of the consumer and the government in the free enterprise system

- Analyze how the government promotes economic strength

- For today: only write the slides with the ** EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND

GROWING ECONOMY?

Section 1: Benefits of Enterprise

Open land, natural resources, and immigrants

Free Enterprise- the social and political commitment to giving people the freedom & flexibility to try out their business ideas and compete in the marketplace

-The U.S. Constitution safeguards these rights-private property rights (5th/14th amendments)-restricts unfair taxation, allows binding contracts

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

**What is American Free Enterprise?**

Profit Motive—force to improve material well-being

Competition—rivalry to attract customers & lower costs

Private Property Rights—you own your possessions

Voluntary Exchange—you may decide what & when to buy & sell

Open Opportunity—everyone can compete

Free Contract—you decide what agreements to enter into

Legal Equality—everyone has the same legal rights

Public Disclosure Laws—companies provide full information

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

Basic Principles of Free Enterprise

The American economy rests on a recognition of the importance of the profit motive.

Meaning business owners and managers make the choices themselves, operating in ways they believe will maximize their profits.

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

**Roles**

Role of the Government- Gov’t regulations- protect property rights, contracts, and other

business activities Consumer protection- example: safe drugs/food Public disclosure laws- requires companies to give consumers

info about their products Environmental Protection

Role of the Consumer- have freedom to make their own economic choices -Consumers

influence producers through their buying decisions. Consumers influence the government’s economic policies through

voting and joining interests groups which persuade public officials to act or vote according to interests of the group members

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

The Public Interest

Public interest can be described as concerns of the public as a whole.

Government responds to public interest by enacting public policy, or laws and standards on topics of public interest.

Consumers can influence public policy through voting or by joining an interest group, which is a private organization that tries to persuade public officials.

Consumers are aided by public disclosure laws, which require companies to give consumers full information about their products.

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

**Section 2: Promoting Economic Strength

Because the market is vulnerable to business cycles, the government creates public policies that aim to stabilize the economy

3 Main Outcomes:1.High employment

2.Steady growth3.Stable prices

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

Promoting Economic Strength

1. EmploymentOne aim of federal economic policyis to provide jobs for everyone who

is able to work.

2. GrowthFor each generation of Americans to

do better than previous ones, theeconomy must grow to provideadditional goods and services.

3. StabilityStability gives consumers, producers, and investors confidence in the

economy and in our financial institutions, promoting economic freedom andgrowth.

Policymakers pursue three main outcomes as they seek to stabilize the economy.

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

High Employment

Provide jobs for everyone who is able to work Keep unemployment rate between 4-6%

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

Steady Growth

Enjoy higher standard of living Economy must grow to provide additional goods and

services

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

Stable Prices

Gives people confidence in the economy Stable banks and freedom from fraud Government wants to prevent sudden, drastic shifts in

prices-If prices increase, this puts a strain on consumers,

especially people like Miss Eilers, who is on a fixed income and strict budget. How?

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

Regulating

Protecting health, safety & well-being Can you identify these agencies and their purpose?

FDA food, drugs, cosmetics

FTC unfair business practices

FCC radio, TV, wire, satellite, cable, phone

FAA airline safety, air-traffic

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

Federal agencies fund many research and development projects. Also, new technology often evolves out of government research.

A patent gives the inventor of a new product the exclusive right to produce and sell it for 20 years.

Encouraging Innovation

The government encourages the development of new

technologies in several ways. Technology is the

process used to produce a good or service.

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

Section Review

1. Policymakers encourage all of the following EXCEPT (a) stable productivity. (b) high employment. (c) stable prices. (d) steady growth.

2. The government encourages advances in

technology and improvements in productivity by (a) maintaining steady price controls. (b) funding research and development projects at many levels. (c) hiring more workers to reduce unemployment. (d) regulating banks and other financial institutions.

EQ: HOW DOES THE PUBLIC SECTOR AND THE PRIVATE SECTOR INTERACT TO MAINTAIN A STABLE, EFFICIENT, AND GROWING ECONOMY?

Assignment

Page 55 #1-5