Economics is the study of how individuals and societies use their limited resources to satisfy their wants and needs. Microeconomics examines individual decision-makers, such as households and firms, within the larger economic system. Macroeconomics looks at the economy as a whole.
Every society must answer three basic economic questions: What to produce? How to produce? For whom to produce? These questions are answered differently in different economic systems. In traditional economies, the answers to these questions are based on custom and habit. In command economies, a central authority, usually government dictates the answers. In market economies, private individuals answer these questions. Mixed economies combine elements of both the command and market economic systems.
How the United States answers these economic questions is the subject of this lesson-series, titled ECONOMICS: Ideas / Concepts / Applications. This series of classroom lessons focuses on the elements of a market system, since the U.S. economy is primarily a free-market economy. The series will introduce basic economic concepts, look at the roles of the public and private sectors in the U.S. economy, examine the larger economy and its performance, and discuss international economics and comparative economic systems.
The United States has six broad goals for its economy: (1) economic freedom-allowing individuals to make economic choices; (2) economic efficiency-maximizing the benefits of limited resources; (3) economic equity-ensuring "fair" economic outcomes (although standards of equity differ); (4) economic security-protecting individuals from risks they cannot control, such as bank failures; (5) economic stability-ensuring full employment and stable prices; and (6) economic growth-raising the nation's standard of living.
These goals reflect America's social and political values. While most people would agree that these goals are desirable, some goals conflict or are mutually exclusive. As a result, policy-makers must decide which goals are most important given the country's needs at the time.
Student-directed Classroom Activity:
- Based on the six goals mentioned above, and your general (though perhaps limited) knowledge of economics, consider what goals you think are most important and how well the American economic system balances these goals. Engage your class in a general discussion and come to a consensus. Make a list with the most important goal as #1 and the least important as #6.
- Critics argue that the Obama Administration in its first two years has controlled too much of the U.S. free-market economy, thus dictating answers to society's basic economic questions and directing outcomes. Have these outcomes produced economic growth, lowered the rising unemployment rate, or increased consumer confidence? Explain your answer using data gathered online or by using other available resources. Be able to defend your findings in an essay or a classroom presentation.
Extention Activity:
The following headlines all appeared in one newspaper on one particular day.
- Market Tumbles 101.46 Points
- Gillette Co. Plans to Close Plants
- Congress Considers Massive Budget
- Cost of Cholesterol Treatments Seem Soaring
- Trade Deficit Grows by $12.8 Billion
- UTC Posts Big Profit
- Affiliated Publications Reports Lower Income
- Polaroid Pins Hope on New Camera Line
These were not the only stories about economic issues in that day's news! There were several more----even on the sports pages! Stories about economics and economic choices are all around us. In fact, almost every page of the daily news contains economic information in one way or another. Look through your daily newspaper (print or online) and jot down at least 10 headlines having to do with economics or economic choices.
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