The Social Costs

The cost of instability can be measured in dollars rather easily, but it is harder to measure in terms of human suffering. In human terms, the costs are almost beyond comprehension. Because of these social costs, everyone agrees that stability must be achieved. Economists are interested not only in society's production, but in its mental and social health as well.

Wasted Resources

Human suffering during periods of instability goes beyond not having more goods and services that raise the standard of living. The labor resource is wasted, with people wanting work but not being able to find it. When this happens, the economy fails to satisfy the basic human need to be a useful and productive member of society. This labor situation is particularly acute in inner cities where unemployment rates run high among minority groups.

Wasted resources are not limited to just human resources. Idle factories waiting to be utilized are another wasted resource. Natural resources may also lie unused or go to waste.

Political Instability

Politicians also suffer from the consequences of economic instability. When times are hard, voters are dissatisfied, and incumbents are often thrown out of office. For example, most experts agree that Bill Clinton's victory over President George Bush in 1992 was due in part to the 1991 recession.

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Figure 16.2

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The Misery Index

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1965 1970 1975 1980 1985 1990

Year

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1995

2000

1965 1970 1975 1980 1985 1990

Year

I j Recession years

Source: Bureau of Economic Analysis, United States Department of Commerce

Using Graphs The misery index is the sum of the monthly inflation and unemployment rates. When did the misery index reach its highest point?

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1995

2000

Visit epp.glencoe.com and click on Textbook Updates—Chapter 16 for an update of the data.

If too much economic instability exists, as during the Great Depression of the 1930s, voters are often willing to vote for radical change. As a result, economic stability adds to the political stability of our nation.

Crime and Family Values

High crime rates, too few economic and social opportunities for minorities, the loss of individual freedoms, and the lack of economic stability for many Americans are all grounds for concern. Many people believe that some of these social ills cannot be cured without the help of a strong and stable economy.

When the economy is healthy, the citizens of a society can more easily deal with its social problems. People have jobs and can provide for themselves and their families. Communities can take advantage of higher tax collections, which can be used to increase police protection and other municipal services. Companies are more willing to hire disadvantaged persons and provide on-the-job training.

Economics and Society

Family Values A vibrant economy means that people will be more certain of their ability to provide for themselves and their families. What are some benefits of a healthy economy?

A healthy economy means that people will be more certain of their ability to provide for themselves and their families. When people can do this, they are more positive about the future in general.

^ Section 1

Checking for Understanding

1. Main Idea Using your notes from the graphic organizer activity on page 437, explain what the GDP gap measures.

2. Key Terms Define stagflation, GDP gap, misery (discomfort) index.

3. Explain how economists measure the economic cost of instability.

4. Describe the social cost of instability.

Applying Economic Concepts

5. Misery Index How might the psychological strains that many people feel in difficult

Assessment economic times help prolong an economic downturn? Provide at least one example with your answer.

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6. Making Generalizations If the GDP gap in a given year rose dramatically, what do you think would happen to unemployment and inflation?

7. Making Comparisons How does stagflation differ from the traditional business cycle?

> 'qc. Practice and assess key social studies skills with -■' the Glencoe Skillbuilder Interactive Workbook, Level 2.

440 UNIT 4 MACROECONOMICS: POLICIES

CONTENTS

STUDY AND WRITING

Applying the Writing Process

Researching and writing allows you to organize your ideas in a logical manner. The writing process involves using skills you have already learned, such as taking notes, outlining, and synthesizing information.

Learning the Skill

Use the following guidelines to help you apply the writing process.

• Select an interesting topic. As you identify possible topics, focus on resources that would be available. Do preliminary research to determine whether your topic is too broad or too narrow.

• Write a thesis statement that defines what you want to prove, discover, or illustrate in your writing. This will be the focus of your entire paper.

• Prepare and do research on your topic. First formulate a list of main idea questions; then do research to answer those questions. Prepare note cards on each main-idea question, listing the source information.

• Organize your information by building an outline or another kind of organizer. Then follow your outline or organizer in writing a rough draft of your report.

•A report should have three main parts: the introduction, the body, and the conclusion. The introduction briefly presents the topic and gives your topic statement. In the body, follow your outline to develop the important ideas in your argument. The conclusion summarizes and restates your findings.

• Each paragraph should express one main idea in a topic sentence. Additional sentences support or explain the main idea by using details and facts.

• Revise the draft into a final report. Wait for a day, then reread and revise it.

Practicing the Skill

Suppose you are writing a report on the role political turmoil plays in economic instability. Answer the following questions about the writing process.

1. How could you narrow this topic?

2. Write a thesis statement.

3. What are three main ideas?

4. What are three possible sources of information?

Economic Costs Instability
A systematic approach facilitates the writing process.

Application Activity

Use research resources in your library to find information on political instability during the Great Depression. Write a short report on the topic.

'qc. Practice and assess key social studies skills with the Glencoe Skillbuilder Interactive Workbook, Level 2.

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Responses

  • evan
    What is not a social cost of instability?
    3 years ago
  • jean
    How might the psychological strains that many people feel in difficult economic times help?
    2 years ago
  • sven
    What are the social costs of economic instability?
    2 years ago
  • arabella
    How does stagflation differ from the traditional business cycle?
    2 years ago

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