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Economic Plan
What will be your economic and/or socioeconomic goals? Choose only most
important ones recognizing trade-offs. On a separate sheet of paper, choose one, two,
three, four or all five goals. (See the 5 goals at the end of this handout.) Explain why
you have chosen each goal. Also on this paper, write down the names of the people in
your group and which role each is playing. On another sheet of paper write down
these key vocabulary words and their definition next to the words.
Natural resources; land, labor, capital, economic goals, trade-offs, opportunity costs,
On a separate sheet of paper, answer each of the questions below. You do not need
to write the question, just the number and the answer.
1. Overall, what will be produced? (ie; food, homes, transportation, etc.) How will
it be produced? (Who will do the various jobs and how will you decide who
does which jobs?) For whom will it be produced? (Can only people with money
by goods? How ill people without money get the goods they need?) Who will
make those decisions (government, individuals or a mix)? Explain why you are
making the choices you are making.
2. How will your island government be involved in the economy? (The two
extremes: 1. Government controls everything. 2. Government is not involved
in the economy at all.)
Directions: Use answers to "Economic Plan" (above) to determine the following.
Make sure your responses are consistent with your overall plan.
Will the land be privately owned? If so, who gets it and how?
Should the land be owned by everyone together?
Should you divide it up and distribute it?
If so, should it be divided equally? What constitutes equal?
Where on the island should you live? (Show this on the map you have drawn.)
Why did you choose this location?
8. Should you consider the needs of the environment? How?
9. Who has rights to the water? How will these be provided for?
10. What work must be done?
11. List the kinds of jobs required to sustain the lifestyle you desire.
12. Who should do these jobs?
13. What about the jobs that nobody likes?
14. Does each person just have one job or many?
15. What natural resources (land, labor), will be used to produce goods?
16. Will there be rules governing use of natural resources? Why or why not? If yes,
17. What kind of capital (tools, machines, etc.) will be used to produce goods?
How will this capital be attained?
Basic Needs
18. Are there some basic needs that you believe should be guaranteed for all? If so,
what are they? Or do you think that individuals should secure their needs by
19. Create a name for your team that reflects the type of system you have
At the end of all of this, each group will present their work to the class for a
What will be your economic
goals? Goals:
Choose only most impor
of socioeconomic
Efficiency: Efficiency is achieved when society is able to get the greatest amount of
satisfaction from available resources. With efficiency, society cannot change the way
resources are used in any way that would increase the total amount of satisfaction obtained
by society. The pervasive scarcity problem is best addressed when limited resources are
used to satisfy as many wants and needs as possible.
While efficiency is indicated by equality between demand price and supply price for a given
market, there are no clear-cut comprehensive indicators for attaining this efficiency goal.
While it is possible, in theory, to pinpoint what is needed for efficiency, the complexity of
the economy makes the task difficult to accomplish in practice.
Equity: Equity is achieved when income and wealth are fairly distributed within a society.
Almost everyone wants a fair distribution. However, what constitutes a fair and equitable
distribution is debatable. Some might contend that equity is achieved when everyone has
the same income and wealth. Others contend that equity results when people receive
income and wealth based on the value of their production. Still others argue that equity is
achieved when each has only the income and wealth that they need.
Equity means income and wealth are distributed according to a standard of fairness. But
what is the fairness standard? It could be equality. Or it could be the productive value of
resources. Or it could be need. Standards for equity moves into the realm of normative
Full Employment: Full employment is achieved when all available resources
(labor, capital, land, and entrepreneurship) are used to produce goods and services. This
goal is commonly indicated by the employment of labor resources (measured by
the unemployment rate). However, all resources in the economy--labor, capital, land, and
entrepreneurship--are important to this goal. The economy benefits from full
employment because resources produce the goods that satisfy the wants and needs that
lessen the scarcity problem. If the resources are not employed, then they are not producing
and satisfaction is not achieved.
Stability: Stability is achieved by avoiding or limiting fluctuations in production,
employment, and prices. Stability seeks to avoid the recessionary declines and inflationary
expansions of business cycles. This goal is indicated by month-to-month and year-to-year
changes in various economic measures, such as the inflation rate, the unemployment rate,
and the growth rate of production. If these remain unchanged, then stability is at hand.
Maintaining stability is beneficial because it means uncertainty and disruptions in the
economy are avoided. It means consumers and businesses can safely pursue long-term
consumption and production plans. Policy makers are usually most concerned with price
stability and the inflation rate.
Economic Growth: Economic growth is achieved by increasing the economy's ability to
produce goods and services. This goal is best indicated by measuring the growth rate of
production. If the economy produces more goods this year than last, then it is growing.
Economic growth is also indicated by increases in the quantities of the resources--labor,
capital, land, and entrepreneurship--used to produce goods. With economic growth, society
gets more goods that can be used to satisfy more wants and needs--people are better off;
living standards rise; and scarcity is less of a problem.