Economic Goals free essay sample

ECONOMIC GOALS INTRODUCTION What are economic goals? How do economic goals affect our lives and what are its implications to sustain stability? These questions will be answered based on the materials gathered, learned insights from Miss Nur Shalihah Muhdi, my lecturer for this subject, and using some issues particularly in the country Malaysia. It is a common knowledge that each country is centered by its government who paved way the economic system. Economy as to be the basis of the topic is defined as a study of how people and society end up choosing, with or without the use of money, that could have alternative uses to produce commodities and to distribute them for consumption now or in the future among various group in the society (by our class batch 2000 at Miriam College, Phil. , for economic subject). It could also be defined as a study of choices according to Paul Samuelson. With the better understanding of economy we can now bring to light why there are economic goals and why it is very important that each country must posses such goals. These goals are to attain price stability; make economic growth become faster than population growth; to have low unemployment of resources; and to achieve an equitable distribution of income and wealth. ? Price Stability One of the most important factors to achieve economic growth is to have price stability. It is the ability of the government to control price and minimize fluctuation for the benefit of the public. Price stability shows a situation where the price of goods and services don’t change much over the time. How could it be if a country doesn’t get hold of this influence? Could you imagine how it will create uncertainty to the consumers and firms? Consumers are those who buy products. Now, their consumption will depend on their ability to afford buying a certain product. If a country has price stability, then, the consumers can avoid a â€Å"wait and see† attitude which is to wait until the price decreases. It helps maintain low price of goods and services. This follows such theory that if the price decreases the demand will increase and vice versa. Firms also go after the trend. No businessman will decide to invest if he is aware that there is much fluctuation of price since it will lead to losses. However, if there is control of price, and resources are being affordable most of the time, chances of getting more profit could be more likely to happen. Aside from its advantages for consumers and firms, price stability also holds a big role to reduce inflation rate. Inflation rate is the upward price movement of goods and services in an economy which is measured by consumer price index and producer price index. Malaysian government for example, controls prices on many of the basic items by subsidizing them to keep the price affordable to the public. These items are rice, palm oil, cooking oil, petrol, flour, bread, and many others so that low cost of living could be maintained. It had been reported that the government has spent RM40. 1 billion in 2007 for its subsidies to keep prices levelled. Recently, as of 2009, the government allotted 22 percent of its expenditures for subsidies. Petrol was prioritized with 12 percent of subsidies. Economic Growth faster than Population Growth Economic growth is â€Å"a positive change in the level of production of goods and services by a country over a certain period of time†. Such change is usually being brought about by technological innovation and positive external forces. This essential development should be greater in rate than population growth therefore there would be a zero chance of scarcity rather a sustainable progress and most importantly to uplift the living standard of the people. If let say, the population growth cannot be controlled, while there is no much developmental progress in economy, greater number of people will then be sharing with the same amount of resources and each will be having lesser accumulation than before. Another point is, if economy cannot grow faster than inflation rate, people will also suffer from high cost of living since it will lead to price increase of goods and services while workers who have fixed income will not be able to afford buying the same amount of goods they used to have, instead, it could also be lesser. One good example was three years after Malaysia gain its independence from British occupation; the government gives importance to its growing population rate. They realized that tin and rubber production began to face instability in prices due to fluctuating demand for both commodities and it lso cannot support the growing population’s employment, therefore they launched a program for industrial development making agriculture more modern to ensure adequate returns and at the same time achieve an economy which can be sustained. In 1970, ten years after they begun the program, the government succeeded in providing economic growth over population growth by prov iding more job opportunities to Malaysian people, aside from agriculture diversification and its sprouted industries mainly in wood products, textile, tin and rubber. Low Unemployment of Resources What are resources? What do we mean by unemployment of resources and why it should be lowered? Resources in terms of economy refer to land, labour, capital and entrepreneurship. Land resources are land products, labour refer to the workers, capital would be the means to invest or buy a business and entrepreneurs are the ones who give ideas to run the business. Lowering unemployment of resources would therefore mean lowering the rate of not used resources; or to maximize the use of available resources to expand productivity and create more goods and services. This one important economic goal will not only increase production of goods and services but would also bring more income to the business world and will make the country economically stronger by earning foreign exchange through exporting excess products and services or even labour for those who cannot get a job in their own country. These factors hinder causes of crime rates and corruption activities since people will be getting enough means to live a better life. It would also reduce health problems and malnutrition with enough supply of food and an ability to sustain a healthy living and proper medication. To illustrate such type of low unemployment of resources, I will bring back the history of tin industry in Malaysia. It was late 19th century when it boosts and developed by the British due to increase in the demand of the canning industry worldwide specially the country Britain. The tin resources were abundant and excessive upon discovering major deposit sites in Larut region and Kinta Valley during 1848. These were fully utilized and opened job opportunities even to Chinese workers. Though the supply is excessive for the country, it was eventually exported worldwide and Malaysia became known as the largest producer of tin in the world during 1883. Equitable Distribution of Income and Wealth Equitable distribution is being succeeded when each of one gets a fair share of his rights and choice in terms of job availability, income, health support, better education and proper nourishment. The government must be responsible for this so that there would be a balanced flow of wealth and opportunities to everyone. As such is attainable by knowing what to produce, how to produce and for whom to produce, however tax is the common means of every country. What to produce is a question that answers what products are necessary for the time being. How much to produce sets limits of production thus promotes avoidance of exploitation. The third question, for whom to produce gives priority among the various people who are in need of concentration. These are actually often neglected by the government especially in third world countries, the reason why the rich become richer and the poor become poorer. I have read many issues that imply negligence of these factors and it is sad to say that this ‘negligence’ is happening to my own country Philippines. Another great way to drill equilibrium is to impose taxes among workers and businessmen and also a value added tax (VAT) on goods and services. Through taxation, government can generate fund so as to give support to the needy. This is actually a common policy of every country. If you are getting more income then you will also have to pay more taxes from your salary up to your expenditures. Throughout my research, I came to know that Malaysia experienced unbalanced distribution of income and wealth. This happened when British had mainly concentrated in western part of Malaya being more urbanized and was of a higher income group compared to those who lived in the east who were absolutely farmers and fishermen. The eastern become an ethnic group with low level of income. CONCLUSION Upon distinguishing the importance and benefit of four economic goals which are price stability, economic growth faster than population growth, low unemployment of resources, and equitable distribution of income and wealth, we could now be more responsive on every economic decision our government are dealing with and also on economic issues we are encountering on day to day basis. It would still be in the hands of our government how they run and execute these very important factors to achieve developmental progress in our economy. It is simply because they are the one who have the control of distribution, generate laws and reprimands to protect the public and the local market. The more effective the government in observing such goals, the more the people will enjoy the benefits, having a better standard of living with job opportunities to everyone, quality education, descent food on their table, medication and shelter without compromising the needs of the future generations.