Some Theoretical and Experimental Aspects of Mixed Mode Fractures
Mixed Economies Chapter 2 Section 4. Reasons for ‘Mixed’ 1.Laissez-faire economics not realistic...
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Transcript of Mixed Economies Chapter 2 Section 4. Reasons for ‘Mixed’ 1.Laissez-faire economics not realistic...
Reasons for ‘Mixed’1. Laissez-faire economics not realistic
–Some governmental involvement needed–Some needs can’t be met in private
marketplace–Government needs to protect private
property• 5th & 14th Amendments (due process of law)
–Government try to ensure fairness
2. Balance needs with freedom– Must prioritize goals– Some goals better met by free
market, others are not– Ex: Security versus freedom
Circular Flow Model, adjusted
• Add government in middle–Factor Market interference–G & S Market interference–Households and firms taxed–Money transfers to households
and firms
Compromise in AmericaCompromise in America
Market Economy (Free Enterprise) restricted by
government
Government Intervention• American Government is a Republican
form of government–People are elected into office by citizens–These representatives make laws that
reinforce the will of the society
• Our rulers derive their power from the people
The American People Desire…
• Collective Goods and Services (also known as public goods and services)–These are items that benefit large
numbers of people and would not be available to everyone if each individual had to provide for them
–Examples include:
Government method of Supplying Public Goods
• TAXES!!!–Income Tax–Sales Tax–Property Tax–Gasoline Tax–Luxury Tax–Automobile Tax More on taxes later in the class…
Regulatory Role of Government
• Some industries would not benefit the whole if allowed to compete freely–Prices would rise –Quality would decline
• As a result the government regulates, or intervenes, in certain industries
• Examples include:
Government has also outlawed MONOPOLIES
• A monopoly is when one business controls the entire production of a product
• This would lead to a breakdown of our economy (no Invisible Hand to regulate)
Externalities• Negative
– Pollution– Global Warming– Noise
• Positive– Smoke Alarms– Well maintained
lawn & home value– Good Schools &
Community Crime Rates