Stabilization
Concept of stability
Stability is very wide concept. In the context of economy stability usually refers to macroeconomically stable environment. This means stable average price level (i.e. low inflation), low unemployment (i.e. easy to find a job) and moderate economic growth. All these indicators together describe relatively well general condition of the economy. When inflation and unemployment is low and economy experiences economic growth, economy is usually doing well also at micro level.
However, as economy grows cyclically, instability is natural part of the economy. There are periods during which prices grow very fast or it is extremely difficult to find a job. This is the time when government intervention could improve the performance of the economy. Read the following two pages about how government can intervene to carry out stabilization function and see some statistics concerning economic instability.