Current Events (none on Quiz/Test days):
The Test is on Chapter 1 is today.
Clear your desk except for a pencil. Once everyone is quiet, and no talking during the Test, we can begin. Be sure to put your name on the Test and the Scantron. You may write on both the Test and the Scantron.
If you finish early, you may take out non-class materials; once everyone is finished, put away the non-class materials. Then, I will collect the Scantron first, and then I will collect the Test.
Be sure your name is on both the Scantron and the Test.
If your name is not on the Test it will not be returned.
Please note: skip #26 and #33 (leave them blank).
The final questions, either answer "A" or "B," "A" if True--the correct definition, or "B"--if the phrase does NOT define the term properly. Read the sentences in a simple manner in other words.
Chapter 2 Economic Systems and Decision Making
Section 1: Economic Systems
Economic systems help societies provide for the wants and needs of their people. Three major economic systems have evolved over the years: traditional, command, and market economies. In the traditional economy, the WHAT, HOW, and FOR WHOM questions are answered by tradition, customs, and even habits handed down from generation to generation. In a command economy, a central authority answers the three basic questions. In a market economy, decision making is decentralized with consumers and entrepreneurs playing a central role. Most economies in the world today feature some mix of traditional, command, and market economies.
Chapter 2: Economic Systems and Decision Making
Drag and Drop
Section 2 Evaluating Economics Performance
The seven major economic and social goals used to evaluate the performance of an economic system are economic freedom, economic efficiency, economic equity, economic security, full employment, price stability, and economic growth. If the system does not perform as people would like, people can lobby for laws to achieve their goals. One example would be the Social Security program that was enacted to achieve the goal of economic security.
Rule of 72
Determinants of growth
Developing economies tend to lag behind industrialized economies in access to capital and in technological development. Foreign direct investment and international aid programs that provide technological assistance, though, help to provide a technology transfer from industrialized to developing nations.
For example, according to the Wall Street Journal, Obama Financed Offshore Drilling in Brazil.
And again, according to the Brookings Institution, Obama supported entrepreneurship in Muslim majority Middle Eastern nations.
Productivity and economic growth
The rate of economic growth can be expressed as:
Changes in total factor productivity result from technological improvements. In industrialized countries, most growth is the result of increases in total factor productivity and in the quantity of capital.
In summary, these are the economic growth goals (as a review): Economic Freedom, Economic Efficiency, Economic Equity, Economic Security, Full Employment, Price Stability, Economic Growth.
Reading Check Interpreting What major themes can you identify in the list of seven economic goals?
Did You Know?
Resolving Trade-Offs Among Goals, p. 46 Determining Cause and Effect: Graphic Organizer
Why do trade-offs among goals exist?
On-the-Job Video Gaming, p. 47
Sharkworld - A project management game, :58
Sharkworld is an intense experience of the exciting daily activities of an international project manager. The game allows aspiring project managers to experiment with project management in a setting where game and the real world are flawlessly intertwined. The game is played via both the online and mobile channels. Projects develop in (accelerated) real-time (24/7) so players have to keep up with a fast pace and act and intervene immediately. Additionally Sharkworld is propelled by an underlying suspense story.
The story is set in Shanghai, where a high-tech large scale shark aquarium is being built on an Olympic location. A Dutch installation company got the job but their last project manager on site has mysteriously disappeared. The Sharkworld player has to take his place. To successfully finish the project he needs to cooperate with for example the Chinese customer, the Chinese authorities and the workers on site. The game interacts with players in many different ways: through websites (both fictional and real), cut scenes, e-mail, newspaper articles, chat, voice-mails and text messages (on the players own telephone).
Sharkworld covers not only economic aspects of project management like planning and budgeting, but also social aspects, such as conflict management, cultural sensitivity and diplomatic skills.
The Reboot: Getting a Job in the Gaming Industry, 6:24
Working in the video game industry is one thing every gamer dreams of doing. According to GameCareerGuide.com, more than 50,000 people in North America alone play, create and design video games for a living. Many gamers would jump at the chance to be paid to play video games, but most don't know the first thing to do when it comes to getting their foot in the door. In this episode of The Reboot, host Rio Pesino speaks with video game recruiters from Bungie, LucasArts, BioWare, Ubisoft, THQ and FullSail about the hiring process, what they look for in a candidate and some insiders' advice on how to break into the industry.
Section 3 American Free Enterprise, p. 48
Free enterprise, another term used to describe the American economy, refers to the competition that is allowed to flourish with a minimum of government interference. A capitalistic free enterprise economy has five important characteristics: economic freedom, voluntary exchange, private property rights, the profit motive, and competition. Another key component is the entrepreneur, who is the risk-taking individual in the economy that starts new businesses and undertakes new ways of doing things in search of profits. The consumer is sometimes thought of as being "king" or sovereign of the market, and government is involved in the economy primarily because people want it to be involved. Because of the government involvement as the protector, provider, regulator, and consumer, the American economy can also be described as a mixed economy, or a modified free enterprise economy.
Guide to Reading
private property rights
mixed or modified free enterprise economy
Taped in the 70s, Economist Milton Friedman informs Phil Donahue when asked to equate greed with capitalism, 2:30.
In-class assignment: Is capitalism to be equated with greed according to Friedman? Is greed found in other economic systems? Can greed (self-interest) be a good thing? Why or why not?
Milton Friedman, 1912 - 2006
Companies in the News
Hot Growth at Claire's
Characteristics of Free Enterprise Capitalism, p. 49
Private Property Rights, p.50
How does voluntary exchange work in the free enterprise economy?
The Role of the Entrepreneur
Reading Check, p. 51
Why are entrepreneurs considered both spark plugs and catalysts of the free enterprise economy?
The Role of the Consumer
What role do consumers play in a free enterprise system? p. 52
The Role of Government
Consumer, p. 53
Modified Free Enterprise
Why do Americans want government to play a role in the economy? Use specific examples.
Profiles in Economics
Tony Hawk: Gliding into the future, 4:37
Tony Hawk helped bring skateboarding to the mainstream and turn the sport into a multi-billion dollar industry. He has ridden the sport's peaks and valleys in popularity and hopes to grow his business as the athlete turned entrepreneur pushes the limits of the sport.
Hayek's 'The Road to Serfdom' in Five Minutes, 5:01
What do all forms of collectivism (command economy) lead to?
Are there differences--in terms of control exercised--between Nazism or Communism?
How is order achieved in these systems?
Can democracies be on the road to serfdom?
In the 1940s, Look Magazine made a comic strip of Hayek's classic book 'The Road to Serfdom'. Hayek went on to win the Nobel Prize in Economics in 1974.
Hayek's central thesis is that all forms of collectivism lead logically and inevitably to tyranny, and he used the Soviet Union and Nazi Germany as examples of countries which had gone down "the road to serfdom" and reached tyranny. Hayek argued that within a centrally planned economic system, the distribution and allocation of all resources and goods would devolve onto a small group, which would be incapable of processing all the information pertinent to the appropriate distribution of the resources and goods at the central planners' disposal. Disagreement about the practical implementation of any economic plan combined with the inadequacy of the central planners' resource management would invariably necessitate coercion in order for anything to be achieved. Hayek further argued that the failure of central planning would be perceived by the public as an absence of sufficient power by the state to implement an otherwise good idea. Such a perception would lead the public to vote more power to the state, and would assist the rise to power of a "strong man" perceived to be capable of "getting the job done". After these developments Hayek argued that a country would be ineluctably driven into outright totalitarianism. For Hayek "the road to serfdom" inadvertently set upon by central planning, with its dismantling of the free market system, ends in the destruction of all individual economic and personal freedom. Hayek argued that countries such as the Soviet Union and Nazi Germany had already gone down the "road to serfdom", and that various democratic nations are being led down the same road. In The Road to Serfdom he wrote: "The principle that the end justifies the means is in individualist ethics regarded as the denial of all morals. In collectivist ethics it becomes necessarily the supreme rule."
Activity: Interdisciplinary Connection
Read 19th-century short stories by Russian authors such as Anton Chekhov or Nikolay Gogal. As you read, list details that describe effects of the Soviet Union's command economy--for example, details about jobs, economic and social status, property rights, individual freedoms, and the government. Write a report summarizing the economic effects that you fin din the story.
MARKET AND COMMAND SYSTEMS, 12:44
BULGARIA - From a Command to a Market Economy, 4:43
IBM Corp. has launched CityOne, an online interactive simulation game designed to enable local government officials find innovative solutions for energy, water, traffic, banking and retail problems in their communities.
Players can explore more than 100 simulated crisis scenarios in CityOne. The solutions must balance various financial, environmental, social and budgetary goals. The solutions include technologies such as business process management, service reuse, cloud computing and collaborative technologies.
HW email to email@example.com or hand in hard copy.
1. What are some ways that Americans have modified the free enterprise economy?
2. How does an increase in the minimum wage involve a conflict of goals?