Economic System GOALS Which goals do each system focus on? -or- Which goals are each system better at attaining?

Analyze how each type of system… meets the broad social and economic goals of freedom, security, equity, growth, efficiency, price stability, full employment, and sustainability.

Rank ‘em! Efficiency Equity Freedom Full Employment Growth Security Stability Sustainability From the list at right, choose what you feel are the top four goals our economy should focus on. Look back in your notes from last week if you don’t remember what they are

GOALS SYSTEMS FOCUS ON Market Command Freedom Growth Efficiency Sustainability Command Equity Security Price Stability Full Employment

Freedom in our system Consumers decide what to buy (demand) Producers decide how to produce it (supply) The marketplace decides who gets it (price)

Growth in our system Innovation and efficient use of FoP results in increased production/consumption at about 3% a year average

Efficiency in our system Competition and profit motive results ineffective allocation of FoP

Sustainability in our system Need for continuing growth leads to long-term thinking about use of FoPs

Equity in our system Increasing production benefits all “A rising tide lifts all boats.”

Security in our system Focus on both individual responsibility (savings) and collective responsibility (welfare) for those individuals and businesses in difficult financial times

Price Stability in our system Federal Reserve (central bank for the U.S.) uses monetary policy to try and keep inflation around 2% NOTE: The Fed & monetary policy will be covered in Unit 7

Full Employment in our system Although it fluctuates due to the ups and downs of the economy, 5% is average. 0% is impossible in a non-command market