Transcript WARM-UP - Cloudfront.net

Goals of the
U.S. Economy
(assignment #5)
Warm-up
 If you had to choose between the following
for a graduation present, which would you
rather get:


your grandpa’s old car,
A 3-week trip to South America with your
closest friends
 Explain your choice. What factors went into
your decision? What did you gain from your
choice and what did you lose from your
choice? Why couldn’t you do both?
Cost & Scarcity
 All choices involve a ‘Cost’ – you gain
something, you lose something
 Because there are limited resources (i.e. $$),
we cannot always do or get everything – this
forces us to make choices – this is called
‘Scarcity’
3 Macro Goals of the U.S. Economy
1. Price Stability – Low Inflation (3-4%)
2. Full Employment/Low Unemployment (<5%)
3. Economic Growth (GDP > 3-4%)
1. Price Stability

Inflation: is the gradual increase of prices
over time

Let’s take a look at an example of inflation:

How much was/is 1 adult movie ticket in:



1997? __________
2002? __________
2007? __________
You Can’t Fight Inflation…
 Prices
will continue to ALWAYS INCREASE
 However, the U.S. wants prices to increase
slowly from one year to the next.
 Target
Inflation Rate is 3-4%!

Would you and your friends still decide to go
watch a movie on a Friday night for $20 a
ticket?

Would you and your friends still decide to go
watch a movie on a Friday night if the price
of a ticket increased to $10.25?

If prices increase too rapidly, consumers will
not want to spend money!

But if prices increase really slowly, it’s almost
unnoticed, and consumer spending remains
stable from year to year!
2. Full Employment/
Low Unemployment

The U.S. wants the unemployment rate to
be low to maximize productivity

You are considered to be unemployed if:
You are actively looking for a job
 And you are 16 years or older


Target Unemployment Rate is 5% or less.
3. Economic Growth
 Gross National Product
 This is one way to measure economic
growth from year to year.
 Essentially, the U.S. wants the economy
to grow every year
 Target GNP Growth is 3-4%
REVIEW
The 3 U.S. Macro Goals Are:
 Low
Inflation=Stable Prices
 Low Unemployment Rate=Full Employment
 GNP Growth=Economic Growth
Review Q’s:
(write out the question and then answer it in your notes)
1. If the price of a bicycle was $100 last year,
what is the highest price it can be this year
to hit the target inflation rate?
2. My name is Sam. I am 19 years old. I
really want a job. Is Sam considered to be
unemployed. Why or why not???
3. Every year, the U.S. economy wants the
nation to grow at a rate of ___-___%.
H.W.-Designing A Flyer
Imagine that you are a candidate running
for office. You recognize the importance of
keeping the economy stable so you
promise that it is one of your main goals to
adhere to the macro goals of the U.S.
economy.
 Design a Flyer that Illustrates the three
macro goals and shows that you mean
business.

Your Flyer Should Have:
Title: U.S. Macro Economic Goals
 Slogan Promising Economic Prosperity
 Three Illustrations that convey each
economic goal of the U.S.:

– Low Inflation
– Low Unemployment
– GNP Growth

The Target %’s for each goal
– Inflation
– Unemployment
– GNP Growth
(Flyer needs to be colored!!!)