1. [ 2.6 ] Supporting Economic Growth

2. [ 2.6 ] Supporting Economic Growth
Learning Objectives
Explain why the government tracks and seeks to influence business cycles.
Analyze how the government promotes economic strength and stability.
Describe the factors that increase productivity.

3. [ 2.6 ] Supporting Economic Growth
Key Terms
Macroeconomics
microeconomics
gross domestic product
business cycle
referendums
obsolescence
patent
copyright
work ethic

4. Tracking the Economy
Yesterday you bought a pack of gum or a new guitar or your first car. Your purchase was just one of millions of exchanges that took place across the country that day. Government economists track these patterns of buying and selling in order to assess the state of the American economy.

5. Tracking the Economy GDP as a Measure of the Business Cycle
Forecasting the Business Cycle

6. Tracking the Economy
The United States Treasury, shown here, is one of many U.S. government agencies that monitor the economy.

7. Tracking the Economy
Business cycles at one time featured wild swings of growth and decline but have in recent decades settled into a moderate pattern. Analyze Graphs What has the United States gained—and lost—with the more moderate cycles of recent decades?

8. Encouraging Economic Strength
Because the market is vulnerable to business cycles, the government tries to create public policies that promote economic strength. Again, the nature and extent of these policies have changed over the course of history. For example, in the 1800s, almost every decade brought a new financial crisis, but the federal government could do little to avert these catastrophes. As new agencies were created in the 1900s, the government gained more knowledge about the national economy and more tools to influence it. In general, policymakers today use these tools to promote economic strength by pursuing three main goals: high employment, growth, and stability—stable prices and secure financial institutions.

9. Encouraging Economic Strength
Maximum Employment
A Growing Economy
Stability
Secure Financial Markets
Economic Citizenship

10. Encouraging Economic Strength
This traditional measure of standard of living does not include many measures that might affect people’s quality of life. Identify Central Issues How might levels of education, poverty, income inequality, and health impact standard of living?

11. Encouraging Economic Strength
The economic crisis of 2008 triggered vigorous debate over government support for the banking industry. Here, citizens clash at a rally protesting the influence of major financial institutions in the United States.

12. Productivity and the Role of Technology
The American economy supports a far higher standard of living than most economies of the world. As you have learned, one way to preserve that high standard is by increasing productivity—producing more outputs from the same or a smaller quantity of inputs.

13. Productivity and the Role of Technology
Technological Progress
Encouraging Innovation
The American Work Ethic

14. Productivity and the Role of Technology
Recent technological developments have made possible a vast expansion in the capacity of this country to produce and store natural gas.

15. Quiz: Tracking the Economy
Why do government experts track the business cycle?
A. to provide a record of what has gone wrong in the past
B. to try to predict what will happen to the U.S. economy
C. to help maintain competitive balance between businesses
D. to give the government a competitive advantage over businesses

16. Quiz: Encouraging Economic Strength
Which of these might indicate that the national economy is stable?
A. Prices for groceries and other daily needs go down from year to year.
B. Prices for groceries and other daily needs stay about the same from year to year.
C. Prices for groceries and other daily needs go up from year to year.
D. Prices for groceries and other daily needs are tightly regulated.

17. Quiz: Productivity and the Role of Technology
How does improved technology allow the economy to operate more efficiently?
A. It enables people to work fewer hours.
B. It ensures that all of the nation’s resources will be used.
C. It ensures that all of the nation’s workers are employed.
D. It helps to make better use of the nation’s limited resources.