Transcript Promoting Growth and Stability

DO NOW ACTIVITY
Why do you think that some
countries grow at a faster pace than
other countries?
What contributes to this growth?
TURN IN BELL RINGER 
Tracking the Business Cycle
 Macroeconomics- the study of behavior and decision making of entire
economies.
 Trends of the economy as a whole
 Microeconomics- study of the economic behavior and decision making of
small units.
 Individuals, families, households, and businesses.
 Economists measure economic well-being by calculating the nation’s gross
domestic product (GDP)—the total value of all final goods and services
produced in an economy.
 Follow GDP to predict business cycles
 Business Cycle- period of macroeconomic expansion followed by a period of
contraction (decline).
 May last a year or continue for many years.
 The government plays a role in attempting to prevent wild swings in
economic behavior.
 Where we are in the business cycle affects our every day life
Promoting Economic Strength
 The government creates public policy to stabilize the economy—
policy makers want high employment, steady growth, and stable
prices.
 Employment- the federal government wants to provide jobs for
everyone who is able to work.
 We want an unemployment rate of about 4-6 %.
 Growth- We want a higher standard of living than that of
previous generations.
 For each generation to do better—the economy must grow to
provide better goods and services to following generations.
(GDP measures such growth!)
 Economic Citizenship- As a voter—your elective choices will
help guide government economic policy (like Obama trying to
pass the Health Care Bill)
Cont.
 Stability- gives consumers, producers, and investor’s confidence
in the economy and in our financial institutions.
 General price levels are one indicator of stability
 When prices increase—consumers feel the strain (especially those
on fixed incomes)
 When prices decrease—producers and consumers feel the strain.
 The health of the nation’s financial institutions are another
indicator of stability
 We want to know that when we go to the bank, our money will be
protected from fraud or mismanagement and shielded from the
effects of economic downturn.
 Federal government monitors and regulates American banks and
other financial institutions.
Technology and Productivity
 The American economy maintains a far higher standard of living than
most of the world.
 We can preserve a higher standard of living by increasing
productivity—shifting the production possibilities frontier outward.
Through work ethic (a commitment to the value of work and
purposeful activity).
 We can also increase productivity through Technology.
 Technology- the process used to produce a good or service.
 Improvements allow an economy to produce more output (goods
and services) from the same or smaller amount of inputs or
resources.
 **We can produce more with less goods (or at least the same amount) **
 Technology allows the U.S. economy to operate more efficiently
and productively.
Government’s Role
 Governments role- the government provides incentives for innovation
(because innovation helps the economy grow)
 Government gives (FREE MONEY) grants to research and
development projects
 Government’s own research institutions produce new technologies
 NASA- creates technology to blast humans into outer space!

NASA also produces “spinoffs” for products that have commercial use
 Scanner for firefighters to see “invisible flames”
 Muscle stimulator for paralyzed people
 Government also offers inventors patents and copyrights.
 Patent- gives the inventor exclusive right to produce the product for 20
years!
 Copyright- grants an author exclusive rights to publish and sell their
creative works.