SECTION 2
Features of the U.S. Economy
Essential Question COPY:
 Describe each of the 5 key features of the
U.S. Free Enterprise Economy, Identify the
three actors and two markets in the circular
flow model and describe what is exchanged
between all three in BOTH markets.
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SECTION 2
Features of the U.S. Economy
Free Enterprise (Copy):
 The U.S. economic system is a version of
capitalism called Free Enterprise
 Free Enterprise has 5 main features or
characteristics.
 Each feature enables U.S. citizens to have
freedom to act in certain ways or to receive
certain benefits that promote a healthy
economy.
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SECTION 2
Features of the U.S. Economy
Instructions on Book work (COPY)
 For each of the five features of free enterprise:
 Identify the feature and give a BRIEF description of
it, IN YOUR OWN WORDS explain why it is
important (Describe what “life” would “look like”
IF we DID NOT have this feature in our economy…
What’s the opposite of the feature?)- Last provide
an example of the feature in real life- you may use
the book example if you need to.
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SECTION 2
Features of the U.S. Economy
Freedom to own private
property/enter into contracts:
 Definition-All citizens have the right to own products. They
may trade, keep, or destroy them. If they wish they can enter into
a contract to exchange their p.p with someone else.
 Importance-If we didn’t have the right to own P.P; anyone
could simply take our stuff (people or govt.) Or we would not be
able to sell/trade our stuff with others (enter into contracts).
 Example- Phones, Cars, Houses, etc.
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SECTION 2
Features of the U.S. Economy
Freedom to make choices: (Person 1)
 Definition-All citizens have the freedom to choose how they
satisfy their needs and wants.
 Importance- The ability to have choices about where we
work, what we buy etc, gives us incentives to work hard and
participate in our economy.
 Example Choosing where you work, what type of food you
buy, what kind of car you drive, etc.
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SECTION 2
Features of the U.S. Economy
Freedom to engage in competition:
(Person 2)
 Definition- Businesses are free to choose what, how, and
for who to produce, EVEN if they are similar to another business;
this rivalry is called competition
 Importance By allowing businesses to compete, consumers
get a wide variety of products to choose from at reasonable
prices.
 Example Apple vs. Samsung; McDonalds vs. Burger King
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Features of the U.S. Economy
Freedom to act in Self-Interest:
(Person 3)
 Definition The ability to do things that benefit you EVEN if
they may not be beneficial to others
 Importance This allows people to take care of themselves,
without putting the needs of others before themselves. Can be a
problem if people behave selfishly or greedily.
 Example
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SECTION 2
Features of the U.S. Economy
Limited Government Involvement:
(Person 4)
 Definition
 Importance
 Example
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SECTION 2
Features of the U.S. Economy
Two markets of the circular-flow
model (COPY):
 product market- on this market finished products
and money payments are exchanged between
individuals, businesses, and government.
 resource market- in this market resources are
provided and consumed to make products in
exchange for money payments between
individuals, businesses, and government.
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SECTION 2
Features of the U.S. Economy
Two markets of the circular-flow
model: (Cont.)
 Draw a Sketch of the Diagram on page 34
in your text book.
 Be sure to label it correctly and
completely
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