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Economic goals
This document outlines and compares three main economic systems - market, command, and tradition - across seven economic goals: economic freedom, economic efficiency, economic equity, economic security, full employment, price stability, and economic growth. It notes that no country has a pure system and that governments must intervene to correct faults in a purely capitalistic market system. Students are then assigned to analyze how changes in one economic goal would affect other goals and to identify the two most important goals for them and which system best accomplishes those goals.
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Economic goals
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- 2. ECONOMIC SYSTEMS MARKET • Progressforced because of money • FREE CHOICE and INDIVIDUAL GAIN • NO GOVERNMENT. ONLY CONSUMERS & PRODUCERS • “THOSE WHO DON’T WORK DO NOT EAT!” COMMAND • Controlled job choice by GOVERNMENT • Provide NEEDS for society (country) • THE GOV’T Decides WHO GETS IT (needs it) • NO PRODUCERS. ONLY CONSUMERS & GOVERNMENT TRADITION • Progress is NOT Stressed. System based on CUSTOM and SURVIVAL • Encouraging and sharing to benefit all in community
- 3. WHY LEARN ABOUTPURE ECONOMIC SYSTEMS? No country has a “PURE” Economic system. ALL ARE MIXED USA = Market. BUT not completely because PURE CAPITALISM HAS FAULTS GOVERNMENT MUST STEP IN TO CORRECT THESE FAULTS There are trade-offs to how much or how little they step in. We need to evaluate what is GOOD and what is BAD in each system in order to form an educated opinion.
- 4. 1. ECONOMIC FREEDOM •Consumers choice: to spend/save money • Producers Choice: Production process = MOST Profitable • Could Free choice ever actually restrict freedom? • With NO Government Monopolies could exist.
- 5. 2. ECONOMIC EFFICIENCY TechnicalEfficiency: • PROCESS – getting the MOST output with the LEAST inputs • Make it as fast as you can and as cheap as you can • EXAMPLE: GM SUVs & Big Trucks Economic Efficiency: • Making products wanted or needed by public • Looks at cost for rest of society (Pollution) • What will benefit society as a whole Is it Possible to be Technically efficient, but NOT Economically Efficient?
- 6. 3. ECONOMIC EQUITY “Fairness”WHO RECEIVES What is produced? OPPORTUNITY: Equal Access Everyone has an equal shot to make money or be educated. RESULTS: Equal Amounts, income distribution Everyone has equal access. Communism: if you are sick you can go to the hospital. If you are hungry, you will get food.
- 7. 4. ECONOMIC SECURITY Protectionagainst economic risks Job Loss, Injury, Economic Downturns, Fire, Bankruptcy GOV’T Protection : COMMAND (Programs) INDIVIDUAL Protection : Market (Insurance) How does each system promote it?
- 8. 5. FULL EMPLOYMENT USESALL RESOURCES Efficiently LAND/LABOR/CAPITAL Specifically LABOR!!! Which system provides work for all? COMMAND ALL WORK FOR COUNTRY
- 9. 6. PRICE STABILITY Absenceof INFLATION and DEFLATION NOT going into a recession and NOT having explosive growth
- 10. 7. ECONOMIC GROWTH •Meeting the demands of population increases • Increasing the standard of living MORE GOODS, MORE SERVICES, MORE MONEY…HOW? MARKET = system pushes producers to make more goods/services because they get to KEEP the PROFIT! COMMAND = As population grows GOV’T will need to increase and produce MORE GOODS/SERVICES
- 11. ASSIGNMENT On a linedsheet of paper let’s analyze how the 7 goals interact with each other 1. With your group, come up with 3 different examples of how a change in one economic goal would affect and/or conflict with all the other economic goals. Write your examples on a lined sheet of paper. PRACTICE FOR QUIZ: 1. Put a star next to the two goals that are most important to you. Explain your reason (2 sentences) 2. Which system best accomplishes these 2 goals?