Characteristics of Free Enterprise
What is the definition of a free market?
A free market is an economic system where prices for goods and services are determined by the open market and by consumers, without government intervention.
What is economic freedom?
Economic freedom is the ability of individuals to make their own economic decisions, including choices about jobs, investments, and expenditures
What is the role of the individual?
Answers what to produce
What is GDP?
Gross Domestic Product, is the total dollar value of all final goods and services produced within a country's borders in a year.
The struggle among sellers to attract consumers by offering the best products at the lowest prices.
Hint: Capitalism thrives on this
What is Competition?
What are the six important characteristics of capitalism and free-market enterprise?
Economic freedom, voluntary exchange, private property rights, profit motive, competition, and limited government involvement.
What is economic equity?
Economic equity refers to the fairness in economic policy and the distribution of wealth, ensuring equal pay for equal work.
What is the role of the entrepreneur?
An entrepreneur is the person who organizes/manages the land, capital, & labor in order to seek a profit (reward) = risk takers
How does unemployment impact economic well-being?
High unemployment can lead to reduced consumer spending, lower economic growth, and increased social welfare costs.
Ruler of the market in determining goods and services produced
Consumer
What is voluntary exchange?
Voluntary exchange is the act of buyers and sellers freely engaging in market transactions that benefit both parties.
Protection from layoffs, illnesses, injuries, or disabilities that prevent them from working
What is Economic Security?
What are the roles of the government?
The Roles include, regulator, protector, provider, and consumer.
What are the 3 common economic indicators?
Inflation, GDP, Unemployment rates
The incentive to improve one’s material well-being (largely responsible for the growth of the Free Enterprise System)
Profit Motive
What role does competition play in capitalism?
Competition drives innovation, improves product quality, and lowers prices, ultimately benefiting consumers.
What are the 7 economic and social goals of the US Economy?
Economic Freedom, Economic Efficiency, Economic Equity, Economic Security, Full Employment, Price Stability, Economic Growth.
How does government regulation affect market structures?
Government regulation can create barriers to entry, promote competition, or protect consumers by enforcing standards and preventing monopolies.
How is consumer spending measured?
Consumer spending is measured by tracking expenditures on goods and services, which is a major component of GDP
Fixed Income
A set income that does not change, even though prices do
How does private property impact economic growth?
Private property rights encourage investment and risk-taking, as individuals can own and control their resources, leading to economic growth.
This goal is achieved when a nation increases the amount of goods and services produced over time
What is Economic Growth
What role does consumer sovereignty play in a free market?
Consumer sovereignty means that consumer preferences determine the types and quantities of goods produced, guiding the economy
What are the effects of inflation on the economy?
Inflation erodes purchasing power, increases costs of living, and can disrupt economic planning for both consumers and businesses.
A severe global economic downturn, particularly affecting the United States, that ran from late 2007 to mid-2009, with its roots in the 2008 global financial crisis
The Great Recession of 2008