Unit 2
Unit 2:
Economic
Systems
1
Unit 2
Unit II
8 days
SECTIONS
Economic Systems
1. Economic Systems (2 days)
2. Circular Flow Model (2 days)
3. Role of the Government (2 days)
Enduring understandings
Students will take away from this unit the following understandings:
1) All societies must answer the three basic economic questions: what to produce, how to produce it, and
who consumes what is produced.
2) Societies answer the three basic economic questions differently, based on their form of economic system
(traditional, command, and market).
3) The circular flow diagram shows how money facilitates the exchanges of goods and services between
households, businesses, and the government.
4) Even in a market economy, the government plays a variety of roles, such as providing public goods and
services, redistributing income, protecting property rights and resolving market failures.
5) Investment in technology and education lead to an increase in productivity.
Key Vocabulary:
Economic Systems
Traditional Economy
Market Economy
Command Economy
Mixed Economy
Product market
Factor Market
Technology
Public Good
Market Failure
Externality
Skills Focus:
Students will be able to:
• Compare and contrast different economic systems, and explain how they answer the three basic
economic questions of what to produce, how to produce, and for whom to produce.
• Identify the particular parts of the Circular Flow Model and explain how money affects each part of
the model.
• Describe the role of government in a market economy and explain why the government provides
public good and services, protect property rights, and resolve market failures. The student will also
be able to give examples of government regulation and deregulation.
• Explain how productivity, economic growth and future standards of living are influenced by
investment in factories, machinery, new technology, and the health, education and training of
people. The student will also be able to give examples and illustrations of how investment in
education, equipment and technology can lead to growth in economy.
Prerequisites:
SS3E2 The student will explain that governments provide certain types of goods and services in a market
economy and pay for these through taxes and will describe services such as schools, libraries, roads,
police/fire protection, and military.
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Unit 2
SS5E2 The student will describe the functions of the three major institutions in the U. S. economy in each
era of United States history.
SS7E1 The student will describe different economic systems (traditional, command, market, mixed) and
how they answer the basic economic questions (What to produce? How to produce? For whom to produce?)
and explain the basic types of economic systems found in South Africa, Egypt, Nigeria, and Morocco
SS7E7 The student will describe the factors that influence economic growth and examine their presence or
absence in Middle Eastern countries such as Israel, Lebanon, Turkey, Israel, Saudi Arabia, and Iran.
Connections:
The Business and Computer science course Business Essentials as well as the Marketing, Sales, and
Service courses Marketing Principles and Advanced Marketing have many curricular connections to this
unit.
Business Essentials:
BCS-BE-6: The student demonstrates an understanding of basic business concepts and how they are
applied to business activities.
a. Explains the role of business in society.
b. Describes the types of business activities.
f. Describes how government affects business.
BCS-BE-7: The student utilizes technology in a variety of ways while solving business problems.
a. Identifies use of technology in the workplace.
b. Describes the impact of technology on the skills needed in the workplace and worker productivity.
Marketing Principles:
MKT-MP-2: Integrate social studies skills into marketing, sales, and service to obtain an understanding of
customers and the economic environment in which they function.
d. Distinguish between various economic systems and the effects on what will be produced, how it
will be produced, and for whom it will be produced.
e. Explain how traditional, command, market, and mixed economic systems affect private ownership
and the role of the government.
Advanced Marketing:
MKT-AM-6: Examine marketing activities and related legal considerations to facilitate business
development and growth.
i. Critique consumer protection laws and agencies.
Suggested Performance Assessment:
Ask students to create posters that explain the three key economics questions and basic economic presented
in this unit. (Posters should include both words and illustrations to clarify concepts.)
Ask students to create a web graphic organizer that shows the significance of free enterprises in the
economy of the United States
Have students create a tree map graphic organizer for traditional, market, and centrally planned economies,
showing details about each type of economy.
Have students create an advertisement for the free market, highlighting its advantages.
Have students complete a Unit 2 assessment project. Suggested assessments can be found in Unit 2
Supplemental Materials #6.
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Unit 2
Unit II
Economic Systems
SECTION 1
Economic Systems
Aim 1 of 2: How do the three economic systems differ with regard to
private ownership, profit motive, consumer sovereignty, competition and
government regulation?
SSEF4a Compare command, market, and mixed economic systems with
regard to private ownership, profit motive, consumer sovereignty,
competition, and government regulation.
Key Vocabulary:
Economic systems, traditional economy, market economy, centrally planned economy, command economy,
mixed economy, socialism, communism, collective, heavy industry, private
Content Expectation: The student will understand that…
• the three economic systems are market, command, and mixed.
• socialism and communism differ.
Core Text
Economics: Principles in action 26-44
Skills Focus Instructional Strategies:
(Activity) Have student groups create posters. Across the top list the different economic systems, down the
left side, list the areas mentioned in the aim question. The group must fill in the chart with how each
economic system is characterized in the specific areas.
(Activity) Have students identify the four economic systems. Then have each student write an essay
detailing the differences and similarities between any two of the systems.
Other Instructional Suggestions:
• (Warm up) Have students answer the questions – How does our economy decide what goods and
services get made? How does it decide how these goods and services get made? How does it
decide who gets the goods and services? Introduce the three economic questions and relate each
question to the idea of scarcity.
• (Lecture) Tell students that each of them plays a vital role in the nation’s economy. Ask them what
role they think they play. Use the presentation pro power-point chapter 2, section 1. To cover the
material for this aim, begin after the part that covers the three economic questions . This includes
excellent powerpoint explanation and discussion questionsas coverage of the four economic
systems.
• (Activity) Divide students into 6 groups. Each group will create a one minute skit that demonstrates
a day in the life of a producer or a consumer in one of the three economic systems. Share skits with
class. Have students discuss how the skits represent the different economies.
• (Discussion) Discuss with students the features of a centrally planned economy. Ask students to
explain the reason for the chronic shortage and shoddy constructions of goods. Lead them to see
that central economic planning has serious flaws.
• (Wrap-up) Close by having students complete a tree graph from the “Reading Support
Transparencies”. The tree graph should be organized like the one illustrated on the bottom of p. 23
in the Teacher’s text. Answers to this graphic organizer are in chap. 2 section 1 of the “Reading
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Unit 2
•
•
Support Transparency Guide”.
(Wrap Up Question) A market economy has an advantage over a traditional economy in that the
market economy
a. controls prices and wages.
b. Fixes incomes of consumers.
c. Limits the profit of large corporations.
d. Adjusts to consumer demands over time.
The answer is D.
(Lecture Notes)
Every society must answer three questions:
- What goods and services should be produced?
- How should these goods and services be produced?
- Who consumes these goods and services?
Societies answer the three economic questions based on their values.
(Use chart fig. 2.2 page 25)
The Four Economic systems
An economic system is the method used by a society to produce and distribute goods and
services.
-Traditional economies rely on habit, custom, or ritual to decide what to produce, how to
produce it, and to whom to distribute it.
-In a centrally planned economy the central government makes all decisions about the
production and consumption of goods and services.
-In a market economy economic decisions are made by individuals and are based on exchange,
or trade.
-Mixed economies are systems that combine tradition and the free market with limited
government intervention.
The Free Market
- Markets exist because none of us produces all the goods and services we require to satisfy our
needs and wants.
- A market is an arrangement that allows buyers and sellers to exchange goods and services.
- Specialization is the concentration of the productive efforts of individuals and firms on a
limited number of activities.
-In a free market economy, households and business firms use markets to exchange money and
products. Households own the factors of production and consume goods and services.
The Market’s Self-Regulating Nature
- In every transaction, the buyer and seller consider only their self-interest, or their own personal
gain. Self-interest is the motivating force in the free market.
- Producers in a free market struggle for the dollars of consumers. This is known as competition,
and is the regulating force of the free market.
- The interaction of buyers and sellers, motivated by self-interest and regulated by competition,
all happens without a central plan. This phenomenon is called “the invisible hand of the
marketplace.”
Advantages of the Free Market
Economic Efficiency As a self-regulating system, a free market economy is efficient.
Economic Growth Because competition encourages innovation, free market encourages
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Unit 2
growth
Economic Freedom Free market economies have the highest degree of economic freedom of
any economic system.
Additional Goals Free markets offer a wider variety of goods and services than any other
economic system.
Centrally Planned Economics
-Organization of Centrally Planned Economies.
In a centrally planned economy, the governmen owns both land and capital. The government
decides what to produce, how much to produce, and how much to charge.
Socialism is a social and political philosophy based on the belief that democratic means should
be used to distribute wealth evenly throughout a society.
Communism is a political system characterized by a centrally planned economy with all
economic and political power resting in the hands of the of the central government.
-Problems of Centrally Planned Economies
Centrally planned economies face problems of poor-quality goods, shortages and diminishing
production.
Rise of mixed Economies
Market economies, with all their advantages, have certain drawbacks.
In a mixed economy, the government purchases land, labor, and capital from households in the
factor market, and purchases goods and services in the product market.
Comparing mixed economies
An economic system that permits the conduct of business with minimal government intervention
is called free enterprise. The degree of government involvement in the economy varies among
nations.
Other Resources:
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•
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Virtual Economics Disk: Focus-High School Economics. Lesson 2: Broad Social Goals of an
Economic System
Learning Styles Lesson Plans Folder, Section 4: Modern Economies p.10.
Unit 1 Folder: Guided Reading and Review p.13
Wall Street Journal Classroom Edition, wsjclassroom.com
Presentation Pro CD-Rom
Differentiation:
• Honors: Remind students that after the breakup of the Soviet Union, most of the other formerly
communist republics abandoned their centrally planned economies and began a transition to largely
free market economies. Ask students to think about the differences between these two economic
systems and to speculate about the major challenges that accompany such a transition.
• Remediation: Create a fact sheet with the heading “Market”, “Command”, and “Mixed”. Under
each heading, write as many facts as possible (in student’s own words) about that type of economy.
• ELL: Define market, command, and mixed. Explain why each is used to describe the different
economies.
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Unit 2
Unit II
Economic Systems
SECTION 1
Economic Systems
Aim 2 of 2: How does each economic system answer the three economic
questions in order to meet broad social and economic goals of freedom,
security, equity, growth, efficiency and stability?
SSEF4b Evaluate how well each type of system answers the three economic
questions and meets the broad social and economic goals of freedom,
security, equity, growth, efficiency, and stability.
Key Vocabulary:
Patriotism, safety net, standard of living, factor payments
Content Expectation: The student will understand that…
• the three economic questions are what to produce, how to produce and who consumes
what is produced.
• different economic systems have different societal values that determine how the
economy answers the three economic questions.
Core Text:
Economics: Principles in Action pp. 23-27
Skills Focus Instructional Strategy:
(Warm-up/Activity) Have students rank each of the economic goals (freedom, security, equity, growth,
efficiency and stability) in order of importance (to them). Discuss which goals command economies value
over others and which goals market economies value. Divide the students into six groups. Each group will
represent one of the economic goals. They will present an argument about why their goal is the most
important (using examples) and argue for one economic system over another based one which system will
be represent their goal. After all groups have gone, introduce the idea of modern mixed economies as a
way to meet all economic goals.
Other Instructional Suggestions:
• (Lecture) Use color transparencies 2A and 2B to lecture and ask the provided questions to stimulate
discussion of the transparencies. The concept of society answering the three basic economic
questions based on the importance they attach to economic goals is stressed in the lecture.
• (Lecture) Use Presentation Pro for a powerpoint lecture and discussion questions. This aim is found
at the beginning of chap. 2, section 1 on the Presentation Pro disc.
• (Activity) Ask students to create posters that explain the three key economic questions and the basic
economic goals presented in section 1. The posters should show how the economic goals determine
how the society answers the three basic economic questions.
• (Lesson Plans) Use sample lesson plans “Constitution/Free Enterprise” and “The United States
Mixed Economy” (Unit 2 Supplemental Materials #1 and #7)
• (Wrap-Up Question) In which economic system does the government own the means of production?
a. traditional
b. mixed
c. market
d. command
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Unit 2
The answer is D.
Other Resources:
• Virtual Economics CD-Rom: Focus-Institutions and Market. Lesson2: Property Rights and
Contracts as economic institutions.
• Learning Styles Lesson Plan-Section 2: The Free Market page 9.
• Nystrom Economic Series: Comparing Economies.
• Color Transparencies at a Glance – Prentice Hall resource collection
• Presentation Pro CD-Rom
Differentiation:
• Honors: Add other goals to the list of economic goals on page 25. Why do you think they should be
economic goals? What could our society do to achieve them?
• Remediation: Ask student to write a sentence that summarizes the content under each subhead in
section 1 pp. 23-27. ( For “ Economic Efficiency” students might write: “Societies strive for
efficiency; they try to maximize what they can get for the resources they have. “)
• ELL: Define each of the economic goals listed on pages 25 and 26.
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Unit 2
Unit II
Economic Systems
SECTION 2
Circular Flow Model
Aim 1 of 2: How would you interpret a circular flow diagram in order to
explain the product market, the resource market, the flow of goods and
services between and among businesses, households and governments, and
the flow of money?
SSMI1a Illustrate by means of a circular flow diagram, the Product
market; the Resource market; the real flow of goods and services between
and among businesses, households, and government; and the flow of
money.
Key Vocabulary:
Market, specialization, household, firm, factor market, profit, product market
Content Expectation: The student will understand that…
• markets exist to bring consumers, producers, and the factors of production together.
• the Circular Flow Model shows the flow of money, factors of production, and goods
and services throughout the economy.
Core Text:
Economics: Principles in Action, pp. 28-33
Skills Focus Instructional Strategy:
(Activity) Designate a desk on one side of the room as a “household” and a desk on the other side of the
room as a “firm”. Have volunteers holding labels that say “Goods and Services” and “Labor and Capital”
act out the principles of circular flow.
Other Instructional Suggestions:
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•
•
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•
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(Lecture) Explain that in a free market producers and consumers interact freely, each in his or her
own self interest. Use Presentation Pro, chap 2, section 2 to provide power point notes for the
lecture. This Presentation Pro provides bulleted lecture notes, a circular flow diagram and
information that pops up from the diagram throughout the powerpoint.
(Activity) Create large posters of the circular flow diagram. Illustrate them with specific examples
of factors and products.
(Activity) Students will use a web organizer to demonstrate the concept of circular flow.
(Assignment) Use template in supplemental materials for students to create circular flow diagrams
for market and mixed economies (Unit 2 Supplemental Materials #3)
(Wrap-up) Use color transparency 2D with questions to wrap the lesson.
(Wrap Up Question) In a market economy, how are the basic economic questions of what, how, and
for whom to produce?
a. by using a nation’s social customs and traditions.
b. by using a combination of traditional and command economies.
c. by the individuals and firms in the nations marketplace.
d. by the nation’s federal and/or local governments.
The answer is C.
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Unit 2
Other Resources:
• Virtual Economics Disk: Focus-Master Curriculum Guide: Economics and Entrepreneurship.
Lesson 6: Markets in the Circular Flow of the Economy.
• Unit 1 Folder: Guided Reading and Review, page 17.
Differentiation:
• Honors: Create a circular flow diagram for a mixed economy (without looking in the book). Then
compare the circular flow diagram created with the one in the book (page 42) and correct the
original diagram.
• Remediation: Draw a circular flow diagram. Give an example of a transaction that takes place on
the diagram.
• ELL: Why is a circular flow diagram called this? Why do the money, goods and services, and
factors of production have a “circular flow”?
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Unit 2
Unit II
Economic Systems
SECTION 2
Circular Flow Model
Aim 2 of 2: What role does money play in the circular flow diagram and
how does it facilitate activity and change?
SSEMI1B Explain the role of money and how it facilitates exchange.
Key Vocabulary:
Self-interest, incentive, competition, invisible hand, consumer sovereignty, laissez-faire, free enterprise
Content Expectation: The student will understand that…
• money facilitates exchange.
• the free market is regulated by the self-interests of its participants
Core Text:
Economics: Principles in Action, pp28-33
Skills Focus Instructional Strategy:
(Activity) Have students use a copy current newspaper and review all sections, calling particular attention
to the business, job, and want – ad sections as well as advertisement spread throughout the sections. Have
students show how the role of these things in the paper have on money and the circular flow.
Other Instructional Suggestions:
(Warm-up) Ask students what comes to mind when they hear the term self-interest. Explain that in
this section they will learn how self-interest motivates the marketplace.
• (Lecture) Power-point notes and discussion questions regarding self-interest, competition, and
invisible hand are provided in Presentation-Pro Chapter 2, Section 2. Emphasize the portion of the
Presentation Pro that focuses on the “market’s self-regulating nature” and “Adventures of the free
market”.
• (Activity) Read the Profile on Adam Smith on p.33. Complete item #1 under this profile. Rewrite
the passage provided in your own words and explain the concept the passage is trying to convey.
• (Wrap-Up Question) When the U.S. government purchases a submarine from a company, the
government has made a major transacton in the
a. factor market.
b. public market
c. product market.
d. foreign exchange market.
The answer is C.
Other Resources:
• Learning Styles Lesson Plans folder, Chapter 2-Section 2 Lesson Plan, page 9.
• Unit 1 Folder:
Guided Reading and Review, page 15.
Economic Cartoons, page 25.
• Presentation Pro CD-Rom
•
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•
Unit 2
Virtual Economics CD: Focus-World History: Focus on Economics. Lesson 8-Adam Smith and the
Market Economy.
Differentiation:
• Honors: If we did not use money to facilitate exchange, what would we use? Write a scenario in
which goods/services and factors of production are exchanged without money.
• Remediation: Outline the section on pages 30 and 32 titled “The Self-Regulating Nature of the
Marketplace”. Then answer the following question: Why do people participate in the marketplace?
• ELL: Define self-interest, incentive, and competition. Use each term along with the term “money”
to explain why people participate in the marketplace.
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Unit 2
Unit II
Economic Systems
SECTION 3
Role of the Government
Aim 1 of 2: To what extent does the government provide public goods and
services, redistribute income, protect property rights and resolve market
failures?
SSEF5A Explain why government provides public goods and services,
redistributes income, protects property rights, and resolve market failures
Key Vocabulary:
Profit motive, open opportunity, private property rights, free contract, voluntary exchange, competition,
interest group, public disclosure laws, public interest, public good, public sector, free rider, market failure,
externality, business cycle, gross domestic product, macroeconomics, microeconomics, cash transfers,
poverty threshold, welfare, in-kind benefits
Content Expectation: The student will understand that…
• the government provides public goods and services, redistributes income, protects
property rights and resolves market failures.
• the government provides public goods in order to fix possible market failures
Core Text:
Economics: Principles in Action, pp. 54-70
Skills Focus Instructional Strategy:
(Activity) Have students list public goods. For each public good listed have students give a monetary value
to the good. Discuss student answers. Pick 5 goods/services from student responses. For each good, have
students describe scenarios in which these goods would not be publicly provided, but would be privately
provided. What would happen if there were not public goods? Would these goods still be provided?
Other Instructional Suggestions:
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•
•
•
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(Warm-up) Have students read p. 54 the section titled “The Role of Government” Indicate which of
the four questions provided is not true.
(Lecture) Use Presentation Pro Chap. 2, section 4 to lecture on key points and ask discussion
questions throughout the lecture. This section of the Presentation Pro focuses on modern
economies, rise of mixed economies, limits of laissez faire, and government’s role in mixed
economies. Also included here are great visuals of a circular flow model for the mixed economy
and a continuum of mixed economies worldwide.
(Activity) Have student groups create a comparison and contrast chart showing the Advantages and
Disadvantages of government involvement in our economic system..
(Discussion) Discuss with students the concept of laissez faire and how it works in modern
economies. Be sure the students understand the nature of the government participation by
examining the circular flow diagram in this unit.
(Activity) Students (led by teacher) will give examples of positive and negative externalities. What
would the costs of these goods/services be if these externalities were factored into the cost of the
good/service?
(Activity) Use worksheet “Positive and Negative Externalities” (Unit 2 Supplemental Materials #4)
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Unit 2
•
•
•
•
(Lesson Plan) Use sample lesson plan “Public vs. Private Goods”. This lesson allows students to
discuss the role of government in the economy. They complete an activity in which they classify
goods and services as pubic or private.
(Unit 2 Supplemental Materials #2)
(Wrap Up Question) In the American economy, the goal of economic equity is MOST connected
with
a. giving participants a fair chance to succeed.
b. restoring laissez-faire capitalism.
c. creating limits on corporate profits.
d. subsidizing business that would otherwise fail.
The answer is a.
(Lecture Notes)
- Laissez faire is the doctrine that government generally should not interfere in the marketplace.
- Governments create laws protecting property rights and enforcing contracts. They also
encourage innovation through patent laws.
- Americans expect the government to protect them from potential problems that arise from the
production of various products or the products themselves.
Public Disclosure Laws
Laws that require companies to provide consumers with important information about their
products, such as fuel efficiency of automobiles, side-effects of medication.
Public Interest
Both state and federal governments’ involvement in concerns of the public as a whole, such as
environmental protection, sanitary food production.
1. Promoting Growth and Stability
Tracking Business Cycles
• Macroeconomics is the study of the behavior and decision making of entire economies.
• A business cycle is a period of a macroeconomic expansion followed by a period of
contraction.
• One measure of a nation’s macro economy is gross domestic product (GDP). GDP is the
total value of all final goods and services produced in a particular economy.
Promoting Economic Strength
Policymakers pursue three main outcomes as they seek to stabilize the economy.
- Employment
• One aim of federal economic policy is to provide jobs for everyone who is
able to work.
- Growth
• For each generation of Americans to do better than previous ones, the economy must grow
to provide additional goods and services.
- Stability
• Stability gives consumers, producers, and investors confidence in the economy and in our
financial institutions, promoting economic freedom and growth.
2. Encouraging Innovation
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Unit 2
The government encourages the development of new technologies in several ways. Technology
is the process used to produce a good or services.
• 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.
3. Providing Public Goods
A public good is a shared good or service for which it would be impractical to make consumers
pay individually and to exclude nonpayers.
– Public goods are funded by the public sector, the part of the economy that involves
transactions of the government.
– A free rider is someone who would not choose to pay for a certain good or service, but who
would get the benefits of it anyway if it is provided as a public good.
4. Correcting Market failures
• Would the free market ensure that roads are built everywhere they are needed?
• It’s doubtful. Neither could individuals afford to pay for a freeway.
A market failure is a situation in which the market, on its own, does not distribute resources
efficiently.
A. Externalities
• An externality is an economic side effect of a good or service that generates benefits or costs
to someone other than the person deciding how much to produce or consume.
– The building of a new dam and creation of a lake generates:
•
Positive Externalities
–
A possible source of hydroelectric power
–
Swimming
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Boating
–
Fishing
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Lakefront views
•
Negative Externalities
–
Loss of wildlife habitat due to flooding
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Disruption of fish migration along the river
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Overcrowding due to tourism
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Noise from racing boats and other watercraft
5. Providing a Safety Net
The Poverty Problem
The poverty threshold is an income level below that which is needed to support families or
households.
• The poverty threshold is determined by the federal government and is adjusted periodically.
• Welfare is a general term that refers to government aid to the poor.
Redistribution Programs
Cash transfers are direct payments of money to eligible people.
- Temporary Assistance for Needy Families (TANF)
This program allows individual states to decide how to best use federally provided funds.
- Social Security
Social Security provides direct cash transfers of retirement income to the nation’s elderly and
living expenses to the disabled.
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Unit 2
- Stability
Unemployment compensation provides money to eligible workers who have lost their jobs.
- Workers’ Compensation
Workers’ compensation provides a cash transfer of state funds to employees injured while on
the job.
- Other Redistribution programs
•
Besides cash transfers, other redistribution programs include:
In-kind benefits
• In-kind benefits are goods and services provided by the government for free or at greatly
reduced prices.
Medical benefits
• Health insurance is provided by the government for the elderly and disabled (Medicare) and
for poor people who are unemployed or are not covered by their employer’s insurance
(Medicaid).
Education benefits
• Federal, state, and local governments all provide educational opportunities for the poor.
Other Resources:
• Virtual Economics Disk: Focus-Civics and Government. Unit 2: Lesson 4-What Are the Economic
Functions of the Government.
• Nystrom Economic Series: U.S. Government and the Economy.
• The Wall Street Journal Classroom Edition: Chapter 3: American Free Enterprise.
• Presentation Pro CD-Rom
Differentiation:
• Honors: Ask students to research ways the government has acted to minimize negative externalities
in the environment. Have students choose a particular program and write a position paper on its
level of success.
• Remediation: Come up with actions that have a positive externality and actions that have a negative
externality. Make a chart with the headings “Action”, “Externality”, “Effect” and fill it in with 5
actions, their externalities, and if they had a positive or a negative effect.
• ELL: Ask students to study the examples of positive and negative externalities on page 65. Then
have them explain each example in their own words, either orally or in writing.
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Unit 2
Unit II
Economic Systems
SECTION 3
Role of the Government
Aim 2 of 2: What are some examples of government regulations and
deregulations and how do they positively and adversely effect
consumers?
SSEF5b Give examples of government regulation and deregulation and
their effects on consumers and producers.
Key Vocabulary:
Public disclosure laws, public interest
Content Expectation: The student will understand that…
• the government plays a role in regulating in the U.S. free enterprise system
• government regulation and deregulation have both positive and negative effects.
Core Text:
Economics: Principles in Action, pp. 54-70
Skills Focus Instructional Strategy:
(Activity) Divide students into two groups. One group will represent government deregulation. The other
group will represent government regulation. Each group will read about the positive and negative effects of
each. They will debate the issue with each side presenting the positives of their side and rebutting the
negatives. Each side should use specific examples of government regulation and deregulation and their
effects. After the debate, the class will discuss the issues presented in the debate.
Other Instructional Suggestions:
(Lecture) Use Color transparency 3A and the accompanying questions to discuss the features of the
American free enterprise system.
• (Activity) Have students or student groups analyze the chart on p. 55. Might the free market fulfill
the mission of these government regulatory agencies? Explain how this might be carried out in the
free market, without the government.
• (Activity) Have students complete worksheet “Government Involvement” (Unit 2 Supplemental
Materials #5)
• (Lesson Plan) Use sample lesson plan “The Government’s Economic Role” (Unit 2 Supplemental
Materials #8)
• (Wrap Up Question) In the U.S., how are public goods paid for?
a. Private firms collect fees from their employees.
b. Non-profit organizations collect charitable donations from people.
c. The government collects tax revenues from individuals and firms.
d. Corporations make profits from selling goods and services.
The answer is C.
Other Resources:
• Virtual Economics Disk: Focus-Personal Decision Making Focus on Economics. Lesson 8: The
Role of Government: Who Needs It?
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Unit 2
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Unit 1 Folder: Economic Detective, page 36
Color Transparencies- Resource Collection
Differentiation:
• Honors: Research one of the regulatory agencies listed on page 55. Create a poster about its origins,
the role it plays, and what the economy might look like without the agency.
• Remediation: Summarize the arguments given on page 55 about the negative effects of regulation.
• ELL: Explain how and why the economy is regulated by the government.
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