TExES Social Studies 7-12 (232) Economics & Science, Tech and Soc Competency 021

Free Enterprise System

This is made up of the profit motive, voluntary exchange, private property rights, and competition.

Profit motive

The American economy is based upon the _____ _____ where people want to make money

Voluntary Exchange

This is where consumers choose to buy and sell

Sole Proprietorship

This is where one individual owns a business and is responsible for for financing and managing the business.

Sole Proprietorship

One disadvantage of a _____ _____ is that the only capital, money for the business, available is what one person can secure.

Sole Proprietorship

Another disadvantage of a _____ _____ is that they can be sued personally.

Partnership

The benefit to a _____ is that the financial resources and risks can be shared by all.

Partnership

A disadvantage to a _____ is autonomy and being held liable for lawsuit.

Corporation

This has several initial investors and organizes a formal organization with a name where the business becomes a second entity.

Corporations

These are registered with the state and the owners of a _____ can not be held personally liable in civil case.

Consumer

The role of the _____ is vital because they purchase certain goods; however it is because _____ purchase certain goods that businesses make the decisions that they do.

Credit Union

All members of a _____ _____ own this type of financial institution and receive loans at lower interest rates with higher interest rates on accounts.

Savings Account

A way to invest money, _____ _____ are the most secure with the government insuring most accounts up to $100,000 however these yield the lowest interest rate.

Bonds

These are investments where an individual loans government entities money and are very secure with interest rates higher than most savings accounts.

Bonds

These do not mature, or pay back, for several years.

Stocks

These are actual investments in publicly traded corporations and can be risky but the return is high.

Partnership

This is when tow or three people join to open a business together.

Sherman Antitrust Act

This came into affect in 1890 as the first Federal law outlawing practices considered harmful to consumers (monopolies, cartels, and trusts)

Clayton Anti-Trust Act

This outlawed price discrimination, or charging different customers different prices for the same product.

Federal Trade Commission Act

This established the Federal Trade Commission and outlaws unfair methods of competition, acts, or practices that affect commerce.

Robinson Patman Act

This was an amendment to the Clayton Antitrust Act and it prevented unfair price discrimination requiring sellers to offer the same price terms to customers.

Robinson Patman Act

This was designed to protect small retail shops against competition from chain stores by fixing a minimum price for retail products.

Tariff

These are taxes placed on imported goods

Protect domestic business

The US uses the tariff to _____ _____ _____.

General Agreement on Tariffs and Trade

GATT, or _____ _____ _____ _____, is an international set of guidelines that are used to encourage trade between countries.

Federal Reserve

This is also known as the FED which lowers or raises interest rates to maintain the value of the dollar and combat against inflation and unemployment.

Economic Output

When a country goes to war, it normally vastly increases the _____ _____ of the country.

Mass production

When a country goes to war, the government in some cases will finance _____ _____ of war related materials.