LESSON 3: FEATURES OF THE ENTERPRISE SYSTEM
Focus Question: To what extent is the U.S. economy a free-enterprise system?
http://schools.nyc.gov/ve/eco/lesson20073.pdf
Objectives
Students will be able to:
• Describe Adam Smith’s idea of the free-enterprise system.
• Identify the basic features of the free enterprise system as practiced in the U.S. today.
• Discuss how the circular flow of the economy helps support the free enterprise system.
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I. Adam Smith and the Free Enterprise System
• As a homework assignment for Lesson 3, distribute Worksheet 3A, “Adam Smith and the Free
Enterprise System” and have students complete the exercise on the worksheet.
Adam Smith and the Free Enterprise System
• As part of the whole-class discussion in Lesson 3, have the students explain their answers to the
following:
— To what extent do you agree with Adam Smith’s ideas about how the economy should
operate?
— Which of Smith’s ideas is followed most closely in the U.S.?
— Which of Smith’s ideas is followed least closely in the U.S.?
— What questions does this worksheet raise for our class discussion?
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II. U. S. Economic System
Distribute Worksheet 3B, Part I, “U.S. Economic System.” Have students complete the exercise on
the worksheet. Then, as part of the whole-class discussion, have them explain their answers to the
following questions:
— What do we learn from the cartoon about the free enterprise system?
— In your own words, how would you describe each of these features?
— To what extent do these features mirror the ideas of Adam Smith?
— In what ways do these features help promote the interests of business in the U.S.?
— How do these features contribute to making the U.S. economy the largest in the world? Which of
these features is the most important in explaining the success of the U.S. economy?
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III. Circular Flow
Ask students to complete the exercise on Worksheet 3C, “Circular Flow.” Then have them explain
their answers to the following:
— What do we see in this chart?
— How does this chart explain how the U.S. free enterprise system works?
— To what extent does this chart show that our economy follows Adam Smith’s ideas? To what
extent does it show that our economy doesn’t follow Smith’s ideas?
— Does this chart indicate that the government’s involvement in the economy is too much? Too
little? Or just right?
Summary/Assessment
If Adam Smith were alive today, what would he consider right and/or wrong with how the U.S. economy
operates?
Focus Question: To what extent is the U.S. economy a free-enterprise system?
http://schools.nyc.gov/ve/eco/lesson20073.pdf
Objectives
Students will be able to:
• Describe Adam Smith’s idea of the free-enterprise system.
• Identify the basic features of the free enterprise system as practiced in the U.S. today.
• Discuss how the circular flow of the economy helps support the free enterprise system.
--------------------------------------------------------------------------------------
I. Adam Smith and the Free Enterprise System
• As a homework assignment for Lesson 3, distribute Worksheet 3A, “Adam Smith and the Free
Enterprise System” and have students complete the exercise on the worksheet.
Adam Smith and the Free Enterprise System
Exercise. Many people credit Adam Smith, a Scottish economist who lived in the 18th century, with
developing the free enterprise system. Some of Smith’s most important ideas about the free enterprise
system appear in the chart on this page. In the appropriate space below, indicate whether you agree
Smith’s ideas and whether you think these ideas guide the U.S. economy today.
• As part of the whole-class discussion in Lesson 3, have the students explain their answers to the
following:
— To what extent do you agree with Adam Smith’s ideas about how the economy should
operate?
— Which of Smith’s ideas is followed most closely in the U.S.?
— Which of Smith’s ideas is followed least closely in the U.S.?
— What questions does this worksheet raise for our class discussion?
-----------------------------------------------------------------------------------------------------
II. U. S. Economic System
Distribute Worksheet 3B, Part I, “U.S. Economic System.” Have students complete the exercise on
the worksheet. Then, as part of the whole-class discussion, have them explain their answers to the
following questions:
— What do we learn from the cartoon about the free enterprise system?
— In your own words, how would you describe each of these features?
— To what extent do these features mirror the ideas of Adam Smith?
— In what ways do these features help promote the interests of business in the U.S.?
— How do these features contribute to making the U.S. economy the largest in the world? Which of
these features is the most important in explaining the success of the U.S. economy?
-------------------------------------------------------------------------------------------------
III. Circular Flow
Ask students to complete the exercise on Worksheet 3C, “Circular Flow.” Then have them explain
their answers to the following:
— What do we see in this chart?
— How does this chart explain how the U.S. free enterprise system works?
— To what extent does this chart show that our economy follows Adam Smith’s ideas? To what
extent does it show that our economy doesn’t follow Smith’s ideas?
— Does this chart indicate that the government’s involvement in the economy is too much? Too
little? Or just right?
Summary/Assessment
If Adam Smith were alive today, what would he consider right and/or wrong with how the U.S. economy
operates?
