Economics Guided Reading 2.2-2.3

Why is the principal of private property important for capitalism?

It is the right to risk investment, own productive assets, learn new ways of producing, and to enjoy the benefits (profits).

How can capitalism best be described in the US?

An economic system in which private individuals own the factors of production, but decide how to use them within legislated limits.

What are some policies the American government has passed to help create a fair and just economic system?

Equal pay, equal work, fairness in hiring practices, and help for the disabled

What must the economy do in order to keep up with a growing population?

Expand, this means increase the amount of goods and services produced

What happens if the factors of production in an economic system are wasted?

Fewer goods and services overall will be produced

The US has a(n) ______ economic system.

Free enterprise/capitalist

What are the six major characteristics of a pure market economy?

Freedom of enterprise, little or no government control, freedom of choice, private property, profit incentive, and competition.

What are the national goals for the American economic system?

Freedom, efficiency, equity, security, stability, and growth.

What risk is involved in having economic freedom?

Individuals must accept the consequences of their decisions; lack of "safety net"

What are effects of competition?

Lower prices, better quality, and efficient use of resources.

What must nations do in order to achieve their national goals?

Make a plan of action

What are the rights and responsibilities of individuals in the American free enterprise system?

Rights: work whatever way you want (job); use your money to buy whatever goods or services you choose; how much you work (a lot or a little) Responsibilities: support yourself (and your family); use your education to be a productive member of society; vote to elect officials (and be knowledgable of policies and their consequences)

How does the government in the US limit choices in order to protect buyers?

Set safety standards for toys and food; regulate prices

How is the standard of living measured?

The average value of goods and services used by the average citizen over a given period of time.

What do individuals own and control under a free enterprise system?

The factors of production (land, labor, capital, and entrepreneurship)

How does the government give security to the economy?

Through government and social programs

What is the goal of economic freedom?

To allow each member of society to make choices.

What is the goal of economic stability?

To reduce extreme ups and downs in the standard of living