The Economic System of the United States is often referred to as a Market Economy. A Market is defined as anyplace a Buyer or Consumer meet with a Seller or Provider of a good to determine the price and quantity of a good. Thus, a yard sale or Internet purchases qualify as a “market.” Our Market Economy is based on certain fundamental beliefs that have evolved over time. These beliefs have been nurtured by our traditions and customs from colonial times and our system of government.

In this assignment you will look at how are government reinforces these beliefs.

Fundamental Beliefs and Characteristics of a Market Economy

PRIVATE PROPERTY
Labor resources, natural resources, capital resources (e.g., equipment and buildings), and the goods and services produced in the economy are largely owned by private individuals and private institutions rather than by government. This private ownership combined with the freedom to negotiate legally binding contracts permits people, within very broad limits, to obtain and use resources as they choose.

FREEDOM OF ENTERPRISE AND CHOICE
Private entrepreneurs are free to obtain and organize resources in the production of goods and services and to sell them in markets of their choices. Consumers are at liberty to buy that collection of goods and services that best satisfies their economic wants. Workers are free to seek any jobs for which they are qualified.

MOTIVE OF SELF-INTEREST
The "Invisible Hand" that is the driving force in a market economy is each individual promoting his or her self-interest. Consumers aim to get the greatest satisfaction from their budgets; entrepreneurs try to achieve the highest profits for their firms; workers want the highest possible wages and salaries; and owners of property resources attempt to get the highest possible prices from the rent and sale of their resources.

COMPETITION
Economic rivalry means that buyers and sellers are free to enter or leave any market and that there are buyers and sellers acting independently in the marketplace. It is competition, not government regulation, that diffuses economic power and limits the potential abuse of that power by one economic unit against another as each attempts to further its own self-interest.

SYSTEM OF MARKETS AND PRICES
Markets are the basic coordinating mechanisms in our type of economy, not central planning by government. A market brings buyers and sellers of a particular good or service into contact with one another. The preferences of sellers and buyers are registered on the supply and demand sides of various markets, and the outcome of these choices is a system of product and resource prices. These prices are guideposts on which participants in markets make and revise their free choices in furthering their self-interests.

LIMITED GOVERNMENT
A competitive market economy promotes the efficient use of its resources. As a self-regulating and self-adjusting economy, no significant economic role for government is necessary. However, a number of limitations and undesirable outcomes associated with the market system result in an active, but limited economic role for government.

Assignment 4.04

Matching Provisions of the U.S. Constitution with Basic Characteristics of a Market Economy

Complete the following chart by finding in the Constitution the provisions that reinforce the basic beliefs and characteristics of our Market Economy. In each square cite the provision in the Constitution that applies. Some characteristics are found in more than one place. When you finish your chart you can copy and paste it into the answer box or email it to your instructor.

A copy of the Constitution can be found Online at:

http://www.usconstitution.net/const.html

This assignment is worth 100 points


The New York Stock Exchange is the world's leading equities market	The Chicago Board of Trade is the Worlds largest Commodities market