The Six Broad Economic Social Goals

The Three Economic Systems (#1)

• Centrally Planned

• Free Market

• Mixed Market

The Three Important Questions (#2)

• What are we going to produce?

• How are we going to produce it?

• Who gets to consume it?

The Six Broad Economic Social Goals (#3)

Every society seeks to answer the three questions keeping six important societal objectives or social goals in mind.

Identifying These Goals (#4)

• Economic efficiency

• Economic growth

• Economic stability

• Economic security

• Economic equality

• Economic freedom

Basic Economic Truth And Its Significance (#5 and 6)

• Remember that there are not enough resources to satisfy everyone’s wants and some people do not even get their needs.

• Therefore as individuals, as families, as a society we must make choices in how we use our resources.

Economic Efficiency (#7)

• Economic efficiency is the wise use of scare resources.

• As we allocate resources as a society we try to maximize the satisfaction/utility of these resources.

• We want to probably make good choices not possibly. Do so.

Why is Economic Efficiency Important? (#8)

• The reason we must maximize the utility of our resources is because they are scarce and we cannot possibly satisfy everything we might want.

Examples of Economic Efficiency (#9)

• With limited resources available choices must be made with regards to government expenditures, monies devoted to research and development, allocations of healthcare and education.

• We must consider what are the most satisfying ways that we can allocate our limited resources?

What is Standard of Living (#10)

• The standard of living is a measurement of how well a nation satisfies its needs and want.

• In some nations such as Spain and the US most people have their needs met plus many of their wants.

• In many other “poorer” countries people are dying of hunger and sickness because their needs are not being satisfied.

Economic Growth (#11)

• Economic growth is generally seen as an increase in a nation’s production of goods and services (GDP) but it also reflects job creation and an overall increase in the standard of living.

Why is Important? (#12)

• If a nation does not provide for an increase in the production of goods and services, the standard of living of that nation might actually decline over time.

• This means a decrease in satisfaction that can result in increased income and wealth distribution problems, increases in poverty, and political instability.

Why we Need to Create Jobs Each Month? (#13)

• Each month the population of the United States increase naturally thru births but also as a result of immigration.

• Economists estimate that an average of over 100,000 new workers enter the labor force each month.

• Therefore over 1,200,000 new jobs are required each year in order to just maintain the same level of employment

What would Happen if There were no Growth? (#14)

• Without economic growth the standard of living would drop as we attempt to satisfy a larger population with the same or even less goods and services.

• Imagine what would happen if you typically share a pizza with 4 of your friends and suddenly two additional people require a share of the pie. Without a larger pizza or an additional one some or all ofthe shares the people used to receive will have to be downsized.

Economic Stability (#15)

• Economic stability to maintain the economy so as to maintain the value of the currency, employment levels, inflation etcwithin a narrow range to minimize economic uncertainty for businesses and individuals.

Why is Economic Stability Important? (#16)

• Why might happen if people believed money would lose most of its value over a short period of time? • Individuals would not want to hold

cash• Businesses would not want to accept

cash

• What if the dollar were to drop against foreign currencies.• Imported goods would get more

expensive

What Is the FED and What Is its Role (#17)

• The Federal Reserve Bank (:FED”) is our nation’s central bank

• The FED is where the banks bank.

• IT controls the interest rates and money supply of the nation

• Its policies are intended to maintain economic stabiulity

Role of Government and Economic Stability (#18)

• The Federal government also plays an important role with regards to economic stability• By increasing or decreasing taxes

• By increasing or decreasing spending

Fiscal Policy Versus Monetary Policy (#19)

• Actions/policies taken by the FED that effect the economy are called monetary policy.

• Actions/policies taken by the federal government that effect the economy are called fiscal policy

Stabilizing The Economy Just Enough Unemployment (#20)

• In seeking to stabilize the economy both the FED and the national government seek to maintain the “perfect” or desired level of unemployment….4.7%

• the belief is that if unemployment gets lower that 4.7% it will result in a higher level of inflation as companies start to compete to hire workers by offering high wages.

• If unemployment increases too much people will accept blower wages and this might actually result in deflation

The Perfect/Desired Level of Inflation (#21)

• The FED and Federal government generally act to maintain an inflation level of 1.5 to 2%.

• They want prices to increase slowly over time One fear being that if they do not increase the prices might actually decreasewhich results in other economic problems and instability.

Fiscal and Monetary Policy (#22)

Fiscal (Gov)• If economy growing too fast

• Raise taxes

• Decrease spending

• If economy growing too slow• Lower taxes

• Increase spending

Monetary (The FED)• If economy growing too fast

• Raise interest rates

• Decrease money supply

• If economy growing too slow• Lower interest rates

• Increase money supply

Economic Security (#23)

• People and businesses need to be protected from unfortunate circumstances that insurance does not always provide for

Why is Economic Security Important (#24 & 25)

• An unforeseen event can cause tremendous damage to an economy and leave individuals unable to satisfy their needs and wants

• Remember, disasters are never good for an economy!

The Current Virus Epidemic (#26)

• The current pandemic has• Cost over 45,000 lives

• Made over 20% unemployed

• Reduced GDP by trillions of dollars

• Lowered state and local tax revenues

• Stocks have declined by 25% hurting investors, pension funds etc

• Increased demand for medical services

• Devested entire segments of economy including retail, travel, entertainment, sports etc

Government Programs for Individuals and Families (#27)

• The government provides many programs to help individuals and families in need• Disability insurance

• Unemployment insurance

• WIC, Food stamps, special subsidies

• Emergency food and/or shelter

How Does Gov Respond to A Crisis (#28)

• Government can make loans and grants available to businesses and individuals, businesses, and governments

• Federal Emergency Management Agency responds to• Earthquakes

• Severe storms

• Fires

What are Some Ways Gov in Seeking to Provide Security during Virus Epidemic (#29)• FED Has injected $4 trillion into

economy

• The Gov has:• Extensions and subsides to

unemployed• Grants and loans to businesses• Financial assistance to

government• Sending checks to most individuals

and waiving certain payments to government

• Military resources where needed

Economic Equality (#30)

• How fair are various government and economic policies• Are benefits and burdens being

shared in a reasonable manner?

• Are some denied the same opportunities others take for grants?

• Should everyone enjoy a minimal standard of living with specific outcomes such as health care guaranteed?

No Common Definition (#31)

• While all economic systems seek these same objectives in principle, in reality they have different definitions of what these goals actually mean

Outcome v Opportunity (#32)

• When centrally planned economic systems look at economic equality they generally define it as everyone sharing certain outcomes such as access to health care, housing, and education.

• In the free and mixed systems the emphasis is out everyone having a same opportunity to achieve success but without providing for common outcomes

How Does Cuba or North Korea View Equality? (#33)

• In these nations there is minimal wealth and income inequalityand all have access to certain outcomes such as housing, health care, and education.

• These may not compare favorably with the west but for the most part, everyone in their society benefits equally.

How Does The United States View Equality? (#34)

• In the United States we have was to ban discrimination and we have many gov programs to try and give everyone an opportunity for success.

• This is why we offer free public education up to age 18.

• We also have gov agencies such as the EEOC and laws such as the ADA, Tatle 1 and Title 9 that are intended to prevent discrimination

Economic Equality in Spain and Europe (#35)

• While Europe has a mixed economic system, most Europeans have been wiling to sacrifice some of the opportunities to accumulate great wealth for add’loutcomes

• Everyone in Europe has access to advanced health care

• Higher education past secondary school while not open to all is free to those admitted

• Private cars are more expensive to own and operate but there is great mass transit at low cost

• Many people in Europe are very happy

Economic Freedom (#36)

• Economic freedom is the ability to make choices• Where to live & work

• Choices in education and careers

• Opening and operating businesses

• Spending, saving, and/or investing one’s money

• In seeking to satisfy ones’ needs and wants

Why is It the Most Important Social Goal (#37)

• The most satisfying choices are the ones we make for ourselves. These are more efficient and therefore more productive

• If one is more productive growth occurs

• Growth permits stability and security

• This is true for individuals, businesses, And societies!

Economic Freedom Index (#38)

• Nations can be ranked based upon their degree of economic freedom

• Free systems generally have the greatest degree of economic freedom and centrally planned the least.

The United States and Economic Freedom (#39)

• Recently changes in the degree of economic freedom in the US have shown up in the rate of economic growth being experienced. When government regulations increase and business are less free they become less efficient, productive and slower growing.

• The current trend of deregulations has resulted in higher levels of economic growth revering a recenttrend.