2.2: Evaluating Economic Performance & Economic Goals

1. 2.2: Evaluating Economic Performance & Economic Goals

2. Objectives • Describe the basic social & economic goals used to evaluate economic performance. • Evaluate the trade-offs among economic & social goals.

3. Every economic system has goals • Goals serve as benchmarks that determine if the system meets most/all of its people’s needs • The U.S. has 7 major economic & social goals:

4. 1. Economic Freedom • People want to choose own occupations, employers, uses for their $ • Businesses want to choose where & how to produce

5. 2. Economic Efficiency • Factors of production must be used wisely • Waste yields less goods & services = fewer wants & needs satisfied

6. 3. Economic Equity • We have a strong sense of economic fairness, justice & impartiality • No discrimination in employment, no false advertising, laws protecting consumers

7. 4. Economic Security • We want protection in case of: • Illness – health insurance • Layoffs – unemployment compensation • Retirement – Social Security

8. 5. Full Employment • Economic system should provide as many jobs as possible • No job = people can’t support themselves/family, nor can they produce goods & services for others • Desirable unemployment rate = 4% - 5%

9. 6. Price Stability • Stable prices help avoid inflation (a rise in the general level of prices) • Stability makes budgeting easier & adds a degree of certainty about the future

10. 7. Economic Growth • People can have more goods & services • Our population is likely to rise; growth is necessary to meet everyone’s needs

11. Most people agree these 7 goals are necessary for our system to work; what people may disagree on is their ideas about how to reach them • Our economic system is flexible enough to allow choices, accommodate compromises & satisfy most Americans most of the time