Notebook 7 Economics 2 3 Capitalism and Economic

Notebook # 7 Economics 2 -3 Capitalism and Economic Freedom

Economics 2 -3 Capitalism and Economic Freedom ESSENTIAL QUESTION: What are the effects of government involvement in providing public goods and services, redistributing income from one group to another, protecting property rights, and resolving market failures?

Economics 2 -3 Capitalism and Economic Freedom GPS STANDARDS: SSEF 5 a. ) Explain why the government provides public goods and services, redistributes income, protects property rights, and resolves market failures. b. ) Give examples of government regulation and deregulation and their effects on consumers and producers.

Capitalism and Economic Freedom • Under capitalism, the basic economic decisions are made through the free interaction of individuals looking out for their own best interests.

Capitalism and Economic Freedom • Capitalism is a market economy in which private citizens own the factors of production, In a free enterprise system, there is limited government interference and businesses are free to compete. • Free enterprise is another term used to describe the American economy.

Capitalism and Economic Freedom • With economic freedom, people and businesses make their own economic choices.

Capitalism and Economic Freedom • The result of voluntary exchange, in which buyers and sellers are free to decide whether or not to complete a transaction, results in both buyers and sellers believing that the good or service obtained is of more value than the money or product given up. • Private property rights motivate people to succeed. Any rewards they earn are kept.

Capitalism and Economic Freedom • The profit motive encourages entrepreneurship and is largely responsible for the growth of a free enterprise economy. • Competition among sellers helps lower prices.

Evaluating Economic Performance What are the characteristics of free enterprise and capitalism that we just examined? The five characteristics are: 1. 2. 3. 4. 5. economic freedom voluntary exchange private property rights profit motive competition

Evaluating Economic Performance What are the characteristics of free enterprise and capitalism that we just examined? 1. ) FOLDABLEThe five characteristics are: 1. economic freedom 2. voluntary exchange 3. private property rights 4. profit motive 5. competition