Chapter 2
Section 2
Features of the U.S. Economy
Pages 29-35
Objectives
• 1. Explain the basic principles of free
enterprise in the United States.
• 2. Name the two markets of the circular flow
model.
• 3. Explain how the circular flow model reflects
exchange.
Free Enterprise
• Define the word free
• Define the word enterprise
Free Enterprise
• The capitalist economy of the United States is
called a free enterprise system because
individuals in the United States have a great
number of economic freedoms.
Five Features of Free-Enterprise
• The right to own private property and enter
into contracts.
• Make individual choices
• Engage in economic competition
• Make decisions based on self-interest
• Participate in the economy with limited
government involvement and regulation
Collage
• Choose a partner to work with on this project.
• Using magazines create a collage illustrating
the five basic principles of the free-enterprise
system in the United States.
• Write a caption the explains how the collage
represents the features of a free-enterprise
system.
Activity
• Consider a fast-food restaurant. Give examples
of how a fast-food restaurant demonstrates
each of the five features or benefits of a freeenterprise economy.
Economic Actors in Free Enterprise
• Producers-provide goods and services in the
market. They rely on entrepreneurship to
develop new products and production
methods.
• Consumers-influence production by
purchasing goods and services.
• Government-oversees and regulates the
effects of decisions on the economy as a
whole.
Circular Flow Model
• Markets-product market (green)-represents all
of the exchange of goods and services in the
economy.
• Resource market (gold)-exchange of resources
between households and business firms and
the government.
• Income-money paid to households by
business firms and the government in
exchange for the households’ resources.
• Flows-Two different types of flows
• 1. Flow of resources and products
• 2. Flow of payments