January 26,2015Introduction to Business Lecture Notes:Free Market Benefits and Limitations:Benefits:-Provides opportunities for people to work hard and to make more money-Encourages Entrepreneurship or private ownership of businesses.-Competition is encouraged; businesses are free to competeLimitations:-Can become greedy and corrupt-Social inequalityThe Government needs individual tax rates from around the worldSocialism:The system believes that the basic necessities of life must be under the control of thegovernment and the rest of the businesses can be privately owned.Benefits: -Social Equality-Free health care-Free education-Less chances of becoming corrupt-Basic needs are provided forLimitations:-People have less of an incentive to work hard since their basic needs are met.-Brain Drain-this is caused by taxes on professional business being so high.Communism:System where the Government has complete control over all of the factors of production and over the people. (North Korea) There are NO BENEFITSLimitations:-People don’t have any freedom-People see shortages of food supplies or other products-Government dictates livesTwo Major Economic Systems:-Free-Market Economies-Command Economies-Mixed EconomiesGross Domestic Product: (GDP)Total value of goods and services that are produced within a country over a specifiedtime period.-GDP is measured every quarter-When GDP declines in two consecutive quarters, a Recession is declared. -When GDP changes, businesses feel the major effects.-The highest GDP in the U.S is about $17 Trillion. This is why the United States economy if the number one economy in the world currently.-Growth Rate plays a very important role_For example, China has a very high growth rate, that worries the U.S economists because we need to have the highest growth rate to prevent China from taking