1. EPF 5 - knowledge of a nation’s economic goals

2. OBJECTIVE
Be able to describe the official measures of an economy’s health or, in other words, “How do we know if the economy is doing well?”

3. MEASURES OF AN ECONOMY’S HEALTH
Seed Questions
How is our economy doing?
How do you know?

4. WHY IS IT IMPORTANT?

5. BECAUSE “Its the economy!”
The state of the economy is a major factor in how people vote for public officials

6. Seed Question Economic Goals
What should our economic goals be for this country???
(Identify at least three)

7. Economic Goals
Usually a country’s economics goals revolve around three issues?
Inflation
Employment
Productivity

8. Economic Goals 1. Low Inflation 2. Full Employment 1 - 5% is ideal
10% + is painful
Deflation is bad also
2. Full Employment
96% is full
All 16+ yrs. old & able to work

9. Economic Goals 3. Productivity to Increase
Found by dividing input (of resources) by output ($ value)

10. Economic Goals
But how do we know when we’ve reached our economic goals?

11. Economic Goals
But how do we know when we’ve reached our economic goals?
We Look at our Economy’s Measuring Devices

12. Economic Goals
But how do we know when we’ve reached our economic goals?
We Look at our Economy’s Measuring Devices
What are they?

13. Economic Measuring Devices
GNP (GNDP)
Total value of a nation’s products & services in a year:

14. Economic Measuring Devices
Standard of Living:
Measure of the value of goods & services people have:
Divide GNP by population
For example, one year, GNP was $4,235,000,000,000 & the population was 240 million. Therefore, the Standard of living was $17,646

15. Economic Measuring Devices
Consumer Price Index
Measures the average price of 400 different normal household products
Also called the “Cost of Living Index”

16. Economic Measuring Devices
Unemployment Figures
% of workforce out unemployed

17. Economic Measuring Devices
Unemployment Figures
% of workforce out unemployed
But it’s not that simple
We have to look at the types of unemployment

18. Economic Measuring Devices
Structural Unemployment:
Unemployment resulting from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand. Employees need to be retrained
But it’s not that simple
We have to look at the types of unemployment

19. Economic Measuring Devices
Cyclical Unemployment:
Occurs within the business cycle. During prosperity, cyclical unemployment will be low, during depressions, high. Calls for an effort to recover the economy.
But it’s not that simple
We have to look at the types of unemployment

20. Economic Measuring Devices
Frictional Unemployment:
Exists in any economy due to people being in the process of moving from one job to another. Can be positive & might be as high as 4% of unemployment
But it’s not that simple
We have to look at the types of unemployment

21. Economic Measuring Devices
Uncounted Unemployment:
These are people who have stopped trying to find work because they’ve lost hope of finding work. They need to be inspired and encouraged to believe that better times can be had.
But it’s not that simple
We have to look at the types of unemployment

22. OBJECTIVE
Be able to describe the “Economic Cycle” and what factors influence its fluctuations

23. The Economic Cycle
Prosperity
Recession
Recovery
GNP
Depression
TIME

24. The Economic Cycle Make a Large Chart Inflation Employment
Productivity
The Economic Cycle

25. Prosperity Lowest Unemployment Maximum Output
Highest Consumer Spending
Possible Inflation
High Confidence

26. Recession General Slowdown in the Economy Unemployment Rising
Fewer Good/Services Being Produced
Spending Slows Down
Confidence is Waning (Going Down)

27. Depression Prolonged Recession Lowest Amount of Spending
Highest Unemployment
Production is at its Lowest
Tax Collection is Down
Possible Deflation
Feelings of Hopelessness
Poverty Occurs

28. Recovery Economy Picks Up Unemployment Decreases Production Increases
Spending Increases
Confidence Recovers

29. The Economic Cycle
What would you do if you were a ________ during a ________ business cycle?

30. The Economic Cycle Business What will you do??? Consumer Government
MAKE ANOTHER LARGE CHART
Business
Consumer
Government
The Economic Cycle
What will you do???

31. Prosperity
Business:

32. Prosperity Business: Invests/Expands Hires More People
Pays More in Taxes
Maintains Max. Inventories
Reaps Profits
Keeps Prices High

33. Prosperity
Consumers:
The Government

34. Prosperity Consumers: The Government Work Spend, Spend, Spend
Save Some
The Government
Collects Taxes
Keeps Interest Rates High

35. Recession
Business:

36. Recession Business: Starts to slow down production Reduces stock
Cuts back on investments & expansion
Lays off staff

37. Recession
Consumers:
The Government

38. Recession Consumers: The Government Spend less & save more
Protect their jobs more
The Government
Encourages investment by lowering interest rates
Might spend more to stimulate the economy

39. Depression
Business

40. Depression Has massive layoffs or lowers salaries Stops spending
Business
Has massive layoffs or lowers salaries
Stops spending
Eliminates stock (sales)
spends their savings
Cuts back on quality
Lowers prices

41. Depression
Consumers:

42. Depression Stop Spending Spend Their Savings Convert Wealth to Dollars
Consumers:
Stop Spending
Spend Their Savings
Convert Wealth to Dollars
Loiter
Open Their Own Businesses

43. Depression
The Government:

44. Depression Lowers interest rates more Offers job programs
The Government:
Lowers interest rates more
Offers job programs
Spends more on welfare services
Spends more to stimulate the economy (?)
Cheerleads

45. Recovery
Business:

46. Recovery Business: Does the opposite of a recession: Hires Spends more
Invests
Produces
Risks more

47. Recovery
Consumers:
The Government:

48. Recovery Consumers: The Government: Spend more Save less
Collects more tax money
Raises interest rates
Spends more (?)

49. The Economic Cycle
GNP
TIME

50. Complete the “Up or Down” Exercise
ASSIGNMENT # 1
Economic Cycle
Complete the “Up or Down” Exercise

51. ASSIGNMENT # 2 Economic Cycle
With a partner or two, discuss what stage in the economic cycle our country is currently experiencing? Each individual in the group needs to find an article supporting your position on the stage of the economic cycle you believe we’re experiencing and summarize it. From your charts, identify three or more steps you believe the government, businesses, and consumers should each be taking at this point in time? You can include your own opinions

52. OBJECTIVE
Be able to describe the actions a government can do to mitigate the impacts of bad economic times

53. OBJECTIVE
Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Investment Tax Credits
Job Training Programs
Fiscal Policy
Monetary Policy
Unemployment Insurance
“Pure” Research

54. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Investment Tax Credits -
An amount that businesses are allowed to deduct from their taxes reflecting an amount they reinvest in themselves.  Investment tax credits are structured to reward and encourage economic growth

55. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Job Training Programs -
Training programs and other services that are available to assist workers who have been laid off or are about to be laid off. Services are designed to meet local needs and may vary from state to state.

56. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Unemployment Insurance -
A small source of income for workers who have lost their jobs through no fault of their own. Workers who quit or who are self-employed are generally not eligible

57. “Pure” Government Research -
Be able to describe the actions a government can do to mitigate the impacts of bad economic times
“Pure” Government Research -
A term covering funding for research in the areas of science, technology and social sciences. The funding is obtained through a competitive process in which only the most promising receive an award. Such processes, which are run by government, corporations or foundations, allocate scarce funds

58. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Fiscal Policy -
The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy

59. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Fiscal Policy -
The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy
For example, increasing federal spending might stimulate job creation
or reducing taxes might give people more money to spend thus stimulating the economy

60. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Fiscal Policy -
The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy
For example, increasing federal spending might stimulate job creation
or reducing taxes might give people more money to spend thus stimulating the economy
Or Does it?

61. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Monetary Policy -
The management of money supply and interest rates. It’s used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity

62. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Monetary Policy -
The management of money supply and interest rates. It’s used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity
For example, what does increasing the money supply of the country do for the economy?
OR What does decreasing the interest rates charged banks do for the economy?

63. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Monetary Policy -
The management of money supply and interest rates. It’s used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity
For example, what does increasing the money supply of the country do for the economy?
OR What does decreasing the interest rates charged banks do for the economy?

64. Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Fiscal Policy-
Monetary Policy –
DEBATE -

65. EXERCISE
Be able to describe the actions a government can do to mitigate the impacts of bad economic times
Investment Tax Credits
Job Training Programs
Fiscal Policy
Monetary Policy
Unemployment Insurance
“Pure” Research
EXERCISE
Research the history and content of these government programs and present your findings.

66. EPF 5 - knowledge of a nation’s economic goals
COMPLETE THE EPF 5 QUIZLET