Chapter 19: The American Economy

*Voluntary Exchange- is the act of buyers and sellers freely and willingly engaging in market transactions.

• *Voluntary Exchange- is the act of buyers and sellers freely and willingly engaging in market transactions.
• -Both you and the seller benefit.

The Spread of Capitalism

• The Spread of Capitalism
• -Two important concepts laid the foundation for the market system that is at the heart of capitalism.
• First is the idea that people could work for economic gain.
• Second is the idea that govt should have a very limited role in economy (free enterprise).
• -As trade increased in the world, people began to invest money to make profits.

Adam Smith and Capitalism

• Adam Smith and Capitalism
• *Adam Smith- was a Scottish economist and philosopher.
• *The Wealth of Nations- published in 1776, offered a detailed description of life and trade in English society. It also scientifically described the basic principles of economics for the first time.
• -From the writings of Smith and others came the basic idea of laissez-faire economics.
• *Laissez-faire- a French term that means, “to let alone”. According to this philosophy, govt should not interfere in the marketplace.
• -Historically, communism and capitalism have been viewed as two opposing political and economic structures.

Protecting Consumer Rights

• Protecting Consumer Rights
• *Consumerism- a movement to educate buyers about the purchases they make and to demand better and safer products from manufactures affects you personally.
• *Fair Packaging and Labeling Act- requires that every package have a label identifying its contents and how much it weighs.
• *Pure food and Drug Act- 1906- requires manufacturers of foods, cosmetics and drugs to prove their products are safe.

• The economy and you