Business Ch 1 & 2 Dq

Business 110-865

29 August, 2016

Page 34

1. What factors caused American business to develop into a mixed economic system rather than some other type of economic system?

I believe there are four factors that has contributed to the American business developing into a mixed economy: some government control, freedom to business ownership, freedom to choose by the consumer, and the allowance of private and public businesses to function in the same markets. The reason why I feel these four factors help forged this mixed economy is because the government provides some controls where they are not over reaching but provide enough of a safety net to prevent a break down or complete takeover of a market; additionally, providing the environment for new companies to start up. The freedom of business ownership is just as important because it leaves the business to be innovative to meet the demand of the consumer and reinvesting in funds into the business in order to stay innovative. The freedom for the consumer to choose is also as vital. This gives the consumer the power to choose their choice of product or services and therefore creating the supply and demand in order to determine market prices. Just as important, is the ability for public, and private businesses to function in the same market. An example of this is schools, there are public and private schools all in the same market competing for the same students. Each having to provide the best product in order to stay relevant in the market. The public not forcing out the private and the private not forcing out the public. Creating this mixed economy, but I would call it the free economy.

3. Is gross domestic product a reliable indicator of a nation’s economic health? What might be a better indicator?

I believe that the GDP is a bad measurement for the nation’s economic health. Yes, it is one tool of measurement and it is very important but there are flaws to this measurement. The GDP counts positively each...