American 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: determined by society’s values and economic goals

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(ie factories). In practice the government does

Mixed Economy

Some economic decisions are made by private business owners; others are dictated by government officials and their policies

Capitalism

Individuals own products, services, and means of production

High level of social services

Lower emphasis on economic productivity and choice

Socialism

Government who owns products, services, and means of production

Communism

Workers who own products, services, and means of production

Low level of social services

High productivity and choice

Karl Marx

Created communism

Wrote the book “The Communist Manifesto(1848)

Adam Smith

Wrote the “Wealth of Nations”

Capatilism

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 long term legacy of the New Deal is that it expanded the Federal Government’s role in the economy

How a liberal(Democrat) often tries to solve economic problems of poverty and unemployment

“Hands on”

Increase Federal aid to poor by:

Deficit Spending-Gov borrows money to start projects(construction, etc…) to get the economy rolling again

Increasing taxes on wealthy

How a conservative( Republican) tries to solve economic problems of poverty and unemployment

“Hands off”(Laissez- Faire)

Stimulate economy with tax breaks

Balance Budget

Reduce Federal Spending

Little to no Federal aid to poor. This is the job of private charities

How a radical( Communist) tries to solve economic problems of poverty and unemployment

“Choke Hold”

Make all citizens equally wealthy-seize income from the rich and redistribute it

Government control of all business

Is Herbert Hoover a liberal, conservative, or radical, based on how they dealt with the problems of the Great Depression?

Conservative

Is Franklin D. Roosevelt a liberal, conservative, or radical based on how they dealt with the Great Depression?

Liberal

Is Huey Long a liberal, conservative, or radical based on how they dealt with the Great Depression?

Radical

Keynesian Economics

Deficit Spending: Govt borrows money to start projects(construction etc…) that create jobs for people

Which political party tends to embrace “Keynesian” Economics?

Liberal(Democrat)

“Supply-Side” Economics

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

Deficit Spending

Govt borrows money to start projects(construction etc…) that create jobs for people

3 Rs of the New Deal

1. Relief and 2. Recovery- FDR created temporary programs that created temporary jobs so people had money to purchase things

   3. Reform- These programs were long-lasting and designed to help prevent another economic collapse, many of these still exist today(social services)

FDIC

Helped investors

Created many programs like FDIC to assure banking stability

Guaranteed individual bank accounts

Guaranteed depositors money is insured by gov

A reform-still exists today

SEC

Helped investors

Created laws to protect financial information for all stock issued

Limited margin buying and deceptive stock selling

Passed the securities and exchange commission to enforce newly passed security laws, promote stability in market, and to protect investors

A reform-still exists today

CCC

Helped the unemployed

Enlisted 3 million unemployed single men between 17-25 to work at mostly forest management jobs “tree army“

Gave them a good education and get into good shape

Paid $30 a month and $25 went back to their families

Relief/recovery- temporary jobs

WPA

Helped the unemployed

Created many projects like building 1634 schools

Provided work for thousands of writers, artists, actors, and other creative people laying groundwork for future federal programs

Relief/Recovery- temporary jobs

NRA(not the gun group)

Helped laborers

Established minimum wages , max hours, production levels etc…

Sought to stabilize the economy by ending competition, labor conflicts, overworking

Boosted the labor movement, drawing large numbers of unskilled workers into unions

Reform- still exists today

Social Security Act

Helped the unemployed/ elderly but mainly elderly

Gave elderly workers monthly stipends based on previous earnings

Provided aid to poverty stricken mothers and children

Gave the poor elderly small relief payments

Established the nations first federally sponsored system of unemployment insurance

Reform-system of unemployment insurance still exists today

TVA

Helped the unemployed

Created hydroelectric power stations and production and distribution of fertilizer

Provides electricity for large portions

Provides irrigation, flood control, recreational facilities

Relief/recovery- temporary jobs

Which political party’s tends to embrace “Supply-Side”

Conservative(Republican/Libertarian)

The Dust Bowl

A severe environmental disaster that resulted in a massive “black blizzard” dust storms

Causes of the dust bowl

1. Over farming in the 1920s

2. Extended drought

Results of the dust bowl

Massive migration of people to the pacific coast

Worsened the Great Depression