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.
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 “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 “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...