EPF.5 DEMONSTRATE KNOWLEDGE OF A NATION’S ECONOMIC GOALS, INCLUDING FULL EMPLOYMENT, STABLE PRICES, AND

ECONOMIC GROWTH

5d National Economic Goals

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Why do market economies tend to have economic

growth?

Stable Growth in Market Economies

Market economies tend to grow because there are incentives which encourage: people to work, entrepreneurs to bring innovations to market, and businesses to expand, pursuing increased profits.

What can the government do to help the economy toward full employment,

stable prices, and stable growth?

How the Govt Can Help the Economy

When growth is slow and unemployment high, gov’t can :implement policies such as investment tax credits to

encourage businesses to expand and hire more people implement job training programs to help the

unemployed use fiscal policy (e.g., changes in federal taxes and

spending) to help the economy toward full employment, stable prices, and stable growth.

The Federal Reserve System can use monetary policy to help the economy toward full employment, stable prices, and stable growth.

How the Gov’t Can Help cont.

Ongoing governmental economic support includes working to assure the health of the nation’s

financial institutions through regulation and enforcement

supporting unemployment insurance, which helps stabilize the economy in times of slow growth

encouraging invention, innovation, and growth through patent and copyright laws

promoting pure research (e.g., Human Genome Project) through grants and programs such as NIH (National Institutes of Health).