Christine has an M.A. in American Studies, the study of American history/society/culture. She is an instructional designer, educator, and writer.
This lesson will highlight the key economic goals of the United States economy, including examples to help you remember these different values. You'll also consider some of the challenges of balancing these goals.
When you hear news about the status of the economy, you'll often find that the report will include statistics about unemployment. An unemployment rate that's headed upward causes concern because one of the economic goals of the United States is a low unemployment rate, also described as full employment.
The aim for full employment is just one of multiple overarching goals of the United States economy. In this lesson, you'll learn about each of these goals and come away with a better sense of what is meant by a good economy versus a bad economy.
Stability and Security
How do you think you'd feel if one day a ticket to the movies was $9.00, and the next day it changes to $25? Stability in prices is a goal of the U.S. economy and is measured primarily by whether there is inflation or deflation. Inflation occurs when prices increase across the board for everything from the cost of movie tickets, to the cost of milk.
But a price drop in movie tickets could be a sign of trouble, too. Deflation occurs when prices decrease across the board. While price decreases sound like a good deal for consumers, it's not a good deal for the economy as a whole. For instance, if the owners of the movie theater can't make a profit, perhaps part-time jobs at the theater won't exist anymore either. Stability in prices is the desired goal with only a small amount of inflation.
Stability is related to another goal, that of security. You've probably heard of Social Security benefits, which include money older adults receive after a certain age. These benefits are one way of protecting those beyond the average working age and those with disabilities from living in extreme poverty.
There are other ways that you are protected by efforts geared toward security, often without even knowing about it. If you've ever made a deposit into a bank, you may have noticed that, up to a certain amount, your money is FDIC insured. The FDIC, or Federal Deposit Insurance Corporation, was created in 1933, at a time when banks had been failing right and left. With this program in place, if your bank suddenly goes out of business, there is an insurance policy that will make sure you don't lose your money.
Freedom and Equity
But who gets to say whether you put money in the bank or spend it on going to the movies? If you're an adult, the answer is that you decide. This is an example of the goal of economic freedom. This value of our economic system puts emphasis on the rights of individuals and businesses to decide how to use their own funds.
Sometimes challenges can arise when a goal, like economic freedom, bumps up against a goal, like security. Should you have to set aside part of your paycheck for Social Security, even if you don't want to do this? Since both freedom and security are valued, sometimes a balance must be struck between the two, rather than any one goal trumping all the others.
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You can also see this issue arise when another goal enters the conversation, that of equity. In the context of U.S. economic goals, equity refers to the fair distribution of resources in the economy. For instance, when you pay your taxes, some of your money is going toward paying for services everyone can use, like schools and libraries. Even though we value the economic freedom of people determining how to use their own money, we also value giving many people equal access to education, which relates to the goal of equity.
Growth and Efficiency
A particularly measurable goal of the U.S. economy is economic growth. Calculations of the GDP, or gross domestic product, can be used to keep tabs on this. The GDP is the value of everything produced during a specific period of time. This includes goods, such as milk, computers, or bungee cords, as well as services, like work done on a car or medical care provided.
Another aim is that of efficiency. To give you a taste for what is meant by efficiency, think about how a new technology, like the invention of assembly lines, helped industries produce more products, more quickly. Wisely using resources and avoiding wasting them, are also values related to efficiency.
We'll wrap up with the goal of full employment, which we discussed at the very beginning of this lesson. Note that while full employment sounds like it would be 0% unemployment, this is actually not the goal set for the economy. An unemployment rate of about 5% gives some wiggle room for those who are just entering the economy, like students leaving school, and who haven't found a job yet.
The broad goals viewed as central to the U.S. economy are stability, security, economic freedom, equity, economic growth, efficiency, and full employment.
Some goals are particularly measurable. This is the case when using the GDP to look at economic growth, observe inflation or deflation, to consider stability, or look at unemployment rates.
Sometimes there is friction between economic goals, like when our desire to use our money as we please must be balanced with the values of equity and security.
As you complete this lesson, you could prepare to confidently:
Discuss the economic goals of the United States
Highlight the correlation between stability and security
Note the importance of economic freedom and equity as well as economic efficiency and growth
Assess potential conflicts between some economic goals
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