The basic economic goals of a country are subject to many things. Certain questions arise in mind when one thinks about basic economic goals of a country or economy. There can be many questions in mind such as;
- To what are the basic economic goals?
- What type of economic system exists today?
- What are the characteristics of a free enterprise
- Are there any personal economic goals?
- Economic goals from the most important to the least important goals
- Why might our economic goals change over time?
However, these all questions are of great importance and somehow interlinked with each other. Today, we are going to discuss the basic economic goals of a country. However, many people have described it. Some have explained the six basic economic goals, 8 basic economics goals,
and 5 basic economic goals. However, today I am presenting you seven basic economic goals of a country.
Economic Goals Definition
The basic economic goals are desirable by every country. Every country strives to achieve growth, stability, equity, full employment, efficiency, security and economic freedom. These seven targeted conditions are called economic goals. Every country tries to achieve these goals and they set benchmarks for achieving these basic economic goals.
Goals can further be divided in terms of its relevance to macro or microeconomics. The macroeconomic goals are growth, full employment, and stability. Whereas, efficiency, freedom, and equity are the microeconomic goals.
So, let us start with discussing the basic economic goals of a county. The goals help us by;
- Providing direction towards achieving the set targets.
- It also indicates the economic performance of a country.
Some of the goals are qualitative in nature which is quite difficult to be presented in quantitative terms such as freedom and equity. Whereas, employment and growth can be indicated in numerical terms. Let us discuss each of these goals one by one;
Every country tries to have economic freedom according to which they can decide the following;
- freedom of consumers to decide which product to purchase
- Everyone is free to allocate their resources to certain goods or services
- In an economy with economic freedom, the workers are also free to choose their jobs, change their jobs, and go on a strike and to join unions.
- Being an entrepreneur, with the economic freedom you can decide what to produce, how to produce and when to change the production pattern.
- The corporates or individuals have the right to decide their savings as well. It depends on them on how much to save and where to invest further.
As economics always put emphasis on scarce resources, so from the point of view of scarce resources, economic efficiency is one of the main goals.
- Efficiency focuses on the cost-benefit analysis always
- That is why you always relate your marginal revenue with marginal costs. If your marginal benefits are greater than marginal costs, then you are efficient.
- In opposite to that, you will be inefficient if your costs exceed your productivity or benefits.
- One continues till the marginal benefits and marginal costs become equal.
- However, one should stop production when they see marginal costs exceeding their marginal benefits.
So, economic efficiency is always the goal. You can say it the personal economic goal or you can also call it the economic goal of a society or a country or even an economy. All the countries are in the continuous struggle to achieve economic efficiency. As we know that resources are limited, so everyone wants to make the optimum use of those scarce resources.
Economic equity is concerned with the fair or unfair, right and wrong. The term economic equity describes as what is fair or unfair, what should be and what should not be there when it comes to an economic policy. However, equity is something very subjective and people’s perception differ from person to person. So, whenever a country form or evaluate economic performance, so issues arise as who have the benefit and who will not
- What could be the possible effects of a price change?
- Who will be benefited either the consumers or producers?
- Economic equity means the fair distribution of wealth.
- One has to be clear about the possible effects of an economic policy on both the parties.
- All the economic policies should be fair and support the growth of an economy.
All the economies of the world demand economic security. There are certain economic risks over which an individual has no control. So, they sort some security against those inevitable risks.
- Security against a business failure
- Security in terms of a bank failure
- You need security in case a business idea fails
- Security against accidents on the jobs
Such risks can be minimized by ensuring the business or property, individual or corporate savings and overall economic growth. So, an individual and government also do some effort to deal with such risks and unpredictability.
Full employment means using the economic resources to its full capacity. Unemployment is also related to the downturn in the business cycle. Unemployment means that labor resources are not used properly. So, an economy with full employment means that its labor resources are used fully and the production is going on. So, the economy will move towards stability.
A situation in which there is neither inflation nor deflation is called price stability. Inflation means an increase in the general price level in an economy. Due to inflation, the purchasing power of the consumers goes down whereas deflation is the opposite of this. So, it is every country’s goal to keep the prices of the products stable. Govt. also has some responsibilities towards promoting such policies which prevent price fluctuations.
Economic growth means the increase in the real output of the country. I.e. to increase the productive capacity of the country. Moving towards economic growth means enabling an economy to increase the production of goods and services in the long run.
Since it is the only way to increase the living standard of a particular society. So, a country who wants to attain economic growth much produce goods and services. The increased output not only meets the demand of consumers at home but also promotes the exports of the country.
Some of the indicators of economic growth are;
- Increase in real output
- Proper use of the limited resources
- Full employment level
- Better living standard
- Increase in the real output
- Increase in manpower and human capital
- Advancement in technology
So, the country who wants to achieve economic growth should increase their real output. Make proper use of its resources and increase the level of employment as well. However, the increase in human capital, labor force and advancement in technology is the other factor which determines the economic growth.