new deal + economic systems qz history

What are the 3 questions every economic system should answer?

1) what to produce? 2) how to produce? 3) who gets what is produced?

Market economy

Made the marketplace, supply and demand, “hands off” approach (conservative)

Command economy

Govt make economic decisions for people,liberals approach

Mixed economy

Some made by govt, some made by marketplace, mixed

[Who owns property means of production] Capitalism:

Private citizens

[who owns property and means of production] socialism

Govt

[who owns property ad means of production] communism

Workers

Karl Marx

Supported communism

Adam Smith

Supported capitalism

New deal

Programs created by FDR to promote economic and social reform

Long-term legacy of new deal

Expanded the federal govt’s role in the economy

How liberals (democrats) often tries to solve economic problems of poverty ad unemployment

• increase federal aid to poor by: deficit spending— govt borrows money to start projects (construction, etc..) to get the economy rolling again

• Increased taxes on wealthy

• *hands on

How conservative (republican) tries to solve economic problems of property and unemployment

• stimulate economy with tax breaks

• Balance budget—reduce federal spending + little to no federal aid to poor, this job of private charities

• *hands off (laissez-faire)

How radical (communist) tries to solve economic problems of property and unemployment

• make all citizens equally wealthy—seize income from rich and redistribute it

• Govt control of all businesses

• *choke hold

Herbert Hoover

• Conservative

• Believed the economy would correct itself and that direct fed relief would undermine American self-reliance

• Private charities, volunteerism —> business leaders maintain wages, etc

FDR (Franklin D. Roosevelt)

• liberal

• Relief, recovery, reform

• New deal

Huey Long

• Communist (radical)

• “Share our wealth”—allow incomes over $1 mil and inheritances over $5 mil

Keynesian economics [which side agrees with this?]

• liberals

• Deficit spending: Govt borrows $ to start projects that create jobs for people

Supply-side/ trickle down

• conservatives

• Cut taxes for businesses owners in hopes they reinvest (stock market or own business) and it “trickles down” in form of new jobs

3 R’s of the new deal (FDR)

• relief and recovery—he created *temporary programs that created temporary jobs so people had money to purchase things

• Reform—programs were *long lasting and designed to help prevent another economic collapse.