Econ Chapter 3 Guided Reading

SECTION 1

Objectives:

-Describe the tradition of free enterprise in the U.S. and the constitutional protections that underlie it

-Explain the basic principles of the U.S. free enterprise system.

-Identify the role of the consumer in the U.S. free enterprise system.

-Describe the role of the government in the U.S. free enterprise system.

Define the following terms

  1. Profit Motive
  2. Open Opportunity
  3. Legal Equality
  4. Private Property Rights
  5. Free Contract
  6. Voluntary Exchange
  7. Competition
  8. Interest Group
  9. Public Disclosure Laws
  10. Public Interest

Answer the following questions

1. Explain what free enterprise is and how it has aided in American economic prosperity.

2. List and give and example of the basic principles/features of the Free Enterprise System.

a.

b.

c.

d.

e.

f.

g.

3. Explain why public disclosure laws are important.

4. List three examples of public disclosure laws.

a.

b.

c.

5. FDA stands for ______and its regulatory role is ______.

6. FTC stands for ______and its regulatory role is ______.

7. FCC stands for ______and its regulatory role is ______.

8. NRC stands for ______and its regulatory role is ______.

9. CPSC stands for ______and its regulatory role is ______.

10. FAA stands for ______and its regulatory role is ______.

11. EEOC stands for ______and its regulatory role is ______.

12. EPA stands for ______and its regulatory role is ______.

13. OSHA stands for ______and its regulatory role is ______.

14. Explain how the government tries to protect the health, safety, and well being of citizens.

15. List three examples of consumer protection.

a.

b.

c.

16. List 4 complaints that businesses had about government regulation.

a.

b.

c.

d.

17. What argument did the highly regulated industries of telephones and airlines present?

SECTION 2

Objectives:

-Explain how the government tracks and seeks to influence business cycles

- Analyze how the government promotes economic strength

- Analyze the effect of technology on productivity

Define the following vocab words

  1. Macroeconomics
  2. Microeconomics
  3. Gross Domestic Product
  4. Business Cycle
  5. Work Ethic
  6. Technology

Answer the following questions

  1. What three things do policy makers pursue in order to stabilize the economy?
  1. How does the growth of GDP reflect the strengths of the free enterprise system? (Think back to section 1 to answer this question. The answer is in your mind not the textbook).
  1. Explain the stages of the business cycle.
  1. What employment percentage do most economist believe is acceptable?
  1. What are two indicators for economic stability?
  1. Explain how technology helps increase American’s GDP.
  1. How does the government provide incentives for innovation? (List two examples)

SECTION 3

Objectives:

-Identify examples of public goods

-Analyze market failures

-Evaluate how the government allocates some resources by managing externalities

Define the following vocab words

  1. Public Goods
  2. Public Sector
  3. Private Sector
  4. Free Rider
  5. Market Failure
  6. Externality

Answer the following questions

  1. List two examples of public goods
  1. The government provides public goods because it would be

1 ______and 2 ______.

  1. Cost is critical in determining whether something gets produced as a public good. When a good or service is public,
  1. How are public sector goods financed?
  1. How are private sector goods financed?
  1. Fill in the chart from page 64

Step 1: A market failure occursStep 2: A public good is created

  1. List two examples of positive externalities
  1. Explain this sentence: Most public goods generate positive externalities.
  1. List two examples of negative externalities

a.

b.

  1. A city has a parking shortage in the downtown area. Should the city build a new parking ramp or leave it to the private sector? Explain your reasoning.

SECTION 4

Objectives:

-Summarize the I.S. political debate on ways to fight poverty

-Describe the main programs through which the government redistributes income

Define the following vocab words

  1. Poverty Threshold
  2. Welfare
  3. Cash Transfers
  4. In-Kind Benefits

Answer the following questions

  1. Explain why poverty exists in a free market based economy.
  1. What is the poverty threshold in 2004 for
  1. A four person family
  1. A single parent under the age of 65 with one child.
  1. What is the intent of welfare?
  1. Explain a criticism of welfare that is described in your text.
  1. List 4 types of cash transfers

1. 2. 3. 4.

  1. What is the difference between in-kind benefits and cash transfers?
  1. Identify whether the following is a cash transfer or an in-kind benefit.
  2. Unemployment
  3. Social Security
  4. Food Stamps
  5. Assume the poverty threshold is $8,980 for an individual and $12,120 for a two-person household. Based on a 40-hour workweek, how much would you need to earn per hour to be above the poverty threshold for
  1. An individual
  2. A two-person household
  1. Why is it inefficient to leave highway construction to individual states? (pg 71)
  1. What is Medicare?
  1. What is Medicaid?
  1. What is TANF? What does it provide?
  1. What initiatives did George W. Bush introduce to help the needy?