The goal of this unit is to have students gain a basic understanding of how our economic system works. This will be accomplished by posing three vital questions and attempting to answer them. More specific objectives may develop from student inquiry and should be encouraged. The three questions are:
Why is our system sometimes called a “free enterprise” system, and sometimes a “mixed economy”?
How are goods produced and marketed?
What are the functions of money and banking?
Our economic system is based in part on free enterprise. Citizens’ needs will be met by companies that enjoy four basic freedoms in business: 1) a free market in which a buyer may choose any product; 2) free competition and quality; 3) an individual’s freedom to own private property and build up capital; 4) freedom to earn a profit. All these freedoms come with risks and all businessmen also have the freedom to fail.
The American economy is also called a “mixed” economy because of the active role our government plays. Students will be exposed to some of the ways our government interacts in the economy.
The various forms of business organization will be introduced for the students’ consideration. The differences between a single proprietorship, a partnership, and a corporation will be discussed. The organization, financing, and management of corporations will be discussed in some detail. There will also be a discussion of preferred stocks, common stocks, and bonds. This section should provide the students with an understanding of American business. Projects on local businesses and the stock market fit nicely into this section.
Here may be an opportune time to compare the Soviet Union’s “command economy” and our free enterprise system. The two systems can be judged on the basis of the freedom of the worker, the citizens’ standard of living, and the country’s productive capacity. A film or description of the life of a Soviet worker should be of particular interest.
Producing and marketing goods leads us into the four factors of production: land, labor, capital, and management. Each one will be explained and its importance stressed. Terms such as “gross income,” “net income” and “profit” will be analyzed. The students will also divide workers into various classifications.
Producing goods is only part of our economic picture. Students will learn that we are a nation of mass production. We will discuss the various modes of power being used and becoming available for such production. The auto industry may serve as a good example of modern mass production.
The effectiveness of mass production industries depends upon an efficient method of getting their goods to market. Students will be able to identify various methods of transportation used in mass marketing. Mass marketing is made possible by the organization of a system involving manufacturers, wholesalers, transportation experts, and retailers. With this in mind we can explore some factors that have helped to make for more efficient retailing, such as supermarkets, self-service, standard packaging, and the one-price system. The students will, through personal observation, note that within this system of mass marketing, the small retailer can still prosper by offering convenient, special, or personalized service.
Mass marketing presents consumers with an overwhelming variety of products and services. At this stage the students will explore their roles as consumers. 1) Through class projects students will learn where and when to buy, and how to study labels and judge price and quality of products. They will become aware of organizations that aid consumers, and discuss the pros and cons of charge accounts and installment plans. The emphasis will be placed on becoming a wiser shopper.
This unit will conclude with a section on money and banking. 2) We will outline the common features of money, and discuss mediums of exchange and measures of value. The importance of checkbook money will be illustrated as well as the flow, or circulation, of currency.
After a brief introduction to the background of banking, a distinction will be made between state and national banks and between savings and commercial banks. Possible projects may include applying for and renewing a loan. The lesson will end with a consideration of the Federal Reserve System and its effects on banking and credit.