Rank these Goals Economic Growth Full Employment Economic Efficiency Price Stability Economic Freedom Equitable Distribution of Income Economic Security Balance of Trade

Three Basic Economic Questions In allocating resources, there are three basic economic questions that must be resolved by every society

Given that resources are scarce An economic system must decide: What to produce? How to produce? For Whom to produce?

What to produce The question concerning the decision made by an economy about what and how much of a particular goods and services to produce with its limited resources.

How to produce? The question concerning the decisions made by an economy about the technology used to produce a good and service.

For Whom to Produce? The question concerning the decisions by an economy about income distribution – who gets how much of the goods and services produced.

The Four Economic Goals The success of a societies economy is judged by four goals: Economic Growth Economic Efficiency Full Employment Price Stability

Economic Growth A nation’s economy must grow for it to improve its standard of living: Level of economic prosperity What kinds of things are included in standard of living? This is especially true if the population is growing, the economy must also grow to provide new jobs and income.

Economic Efficiency Resources are always scarce-countries must maximize what they will get with the resources they have to work with Where on a PPF curve is their economic efficiency?

Full Employment Full employment means that anyone willing and able to work can find a job When this happens the country is maximizing productivity and using all of its labor resources When there is unemployment, how could it be displayed on a PPF curve?

Price Stability Most people do not like uncertainty We want to know that we can get milk and bread for a certain price It is a goal governments to control inflation/deflation and keep the prices stable Can you think of a way that producers keep prices stable, but still take away more profit?

Using the Economic Goals indicate witch goal satisfies each statement Congress passes a tax act designed to stimulate investment in new capitol equipment The Federal Reserve bank announces plans to fight inflation Mega Motors Corporation announces plans to install robots on all assembly lines The president announces a new program designed to find jobs for workers who are replaced by robots

Additional Goals that are also important to a society are called socioeconomic goals Examples of Socioeconomic goals: Protection of the environment Financial security Economic equity Economic justice Economic freedom

Sometimes there are trade-offs between economic goals and socioeconomic goals In each situation explain the economic goal that will be promoted and the socioeconomic that will not be promoted A farmer uses insecticides to produce more apples A manufacturer uses robots to produce more goods at a lower cost

What do you think? Put a R next to goals you think Republicans would value Put a D next to goals you think Democrats would value Economic Growth Economic Efficiency Full Employment Price Stability Protection of the environment Financial security Economic equity Economic justice Economic freedom

Political Spectrum Democrat Republicans Liberals Tend to favor the environmental goals and economic equality Republicans Conservatives tend to favor economic freedom and Laissez Fair policies which means “let them do (as they please)”