New deal

What are the three questions every economic system should answer?

What to produce?

How to produce?

Who gets what is produced?

Market economy

Economic decisions are made in the marketplace through interactions between buyers and sellers according to the laws of supply and demand. Individual citizens own the means of production. In a pure market economy, the government takes a laissez-faire (hands off) approach to the economy.

Command economy

Central government officials make all economic decisions for the people. In theory, the workers own the means of production. In practice the government does.

owner of property and means of production in capitalism

Private ownership

Owner of property and means of production in socialism

Government

Owner of property and means of production in communism

Working class

Karl Marx

Created the idea of communism in his book the communist manifesto

Adam Smith

Created the idea of capitalism in his book the wealth of nations

New Deal

Legislation and programs created by FDR to promote economic and social reform during the great depression.

Long-term legacy of new deal

The new deal expanded the federal governments role in the economy.

Way that liberal often tries to solve economic problems of poverty and unemployment

They increase federal aid to the poor by deficit spending and increasing the taxes on wealthy. Hands on approach.

Whether a conservative tries to solve economic problems of poverty and unemployment

They stimulate the economy with tax breaks and balanced budget. The balance of budget by reducing federal spending and little to no federal aid to the poor. This is the job of private charities. Hands off approach.

Way that a radical (communist) tries to solve economic problems of poverty and unemployment

They make all citizens equally wealthy by seizing income from rich and re-distributing it. They also have government control of all businesses. Chokehold.

How Herbert Hoover dealt with problems of the great depression

Conservative- trying to cut taxes and balance budgets

How Franklin D Roosevelt dealt with problems of the Great Depression

Liberal – used deficit spending, and gave federal aid to the poor

How Huay Long dealt with problems of the great depression

Radical-sad people should “ share their wealth” and wanted to outlaw income over 1 million and inheritances over 5 million

Keynesian economics

Government should use fiscal policy, including deficit spending, to help recover from recessions by stimulating demand.

What political party embraces Keynesian economics

Liberal (democrat)

Deficit spending

Government borrows money to start projects to get the economy running again. This includes increasing taxes on wealthy.

3 Rs of the new deal

1. Relief/ recovery

2. Reform

Relief/Recovery

FDR created temporary programs that created temporary job so people had money to purchase things

Reform

These programs were long, lasting and designed to help prevent another economic collapse. Many of these programs and agencies are still in existence today.