Topic Two, Lesson Six: Supporting Economic Growth-Economics

Question 9 dealt with a specific example of how prices rise. What would happen if many businesses all across the country found themselves in the sam situation?

A general rise in prices would put a strain on the consumers at the end of the chain, especially those on fixed incomes.

Analyze how the government promotes economic strength and stability.

Create public policies that promote economic strength; tools used to promote economic strength by pursuing three main goals--high employment, growth, and stability--stable prices and secure financial institutions.

Copyright law is meant to ensure that the people who create a work, such as a book, movie, or sonf, profit from it. Why do you think it is necessary to have laws to protect creative works os this sort?

Creative works such as books pr motives are property, just like inventions or other intellectual property; it is important to protect this kind of property in order to encourage people to create it; if it could be easily stolen, people might be less likely to take the time to create such works.

Read the third paragraph of "Tracking the Economy." Using the terms macroeconomic and microeconomic, explain the economic relationship between a nation and the firms and households that are in that nation.

Each household and firm in a nation represents a microeconomic system; together, all the households and firms in a nation comprise the macroeconomic system.

Promoting Economic Strength: Growth

Goal: Later generations to have a better standard of living. Action: Increase spending or cut taxes.

Promoting Economic Strength: Employment

Goal: Providing jobs for all able workers. Actions: Steps to encourage job growth if needed.

Promoting Economic Strength: Stability/Security

Goal: Stable prices and financial institutions to build confidence. Actions: Prevent price fluctuations; monitor and regulate banks.

Describe the factors that increase productivity.

Improved technology, encouraging innovation, individual effort, and work ethic.

Consider the example of NASA in the section "Encouraging Innovation." When NASA was founded in 1958, establishing the space program was something only the government could do. Now, private companies routinely fly cargo and even passengers into space. Why do these private companies owe their existence to NASA and the space programs of other countries?

NASA used government funding to develop the knowledge and the technologies necessary for space flight; private companies rely on NASA's innovations when they launch their own vehicles.

If you pay attention to the news, you probably hear a lot about national economic data such as unemployment or gross domestic product (GDP). If you have a steady job, why should you care how the rest of the country is doing?

The better the whole economy, the more likely your company will stay in business and the more likely you are to keep your job.

Read the section "Stability." Suppose you awn a business that sells hot dog buns and other bread products to restaurants. What would happen if the price of the wheat that is used to make buns went up? Trace the economic impact from the wheat farmer to the flour mill to your business to the restaurant and beyond.

The wheat farmer raised his price, so the flour mill would have to charge more for flour, so I would have to raise the price of bread I make, so restaurants would have to charge more, so people would have to pay more.

Explain why the government tracks and seeks to influence cycles.

Tracking helps the government promote growth and stability; one measure of a nations economic health is Gross Domestic Product (GDP), the total value of all final goods and services produced in a year; if GDP goes up, economy grows; if GDP goes down, economy declines; forecasts cycle to predict what the economy will do.

Read the section "Technological Progress." Suppose you own a factory that makes something you like, such as guitars or shoes. Hundreds of people work at your factory, assembling products, packaging and shipping products, and doing many other jobs. One day you install a robotic system that replaces half your workforce. The new system saves money and increases your profits, but over 100 people lose their jobs. Is that good for the economy or not? Explain your answer.

Yes-That is good for the economy because resources are being used more efficiency. No-That is bad for the economy because so many people will be put out of work.