New deal Quiz

• What are the 3 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 (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.

• Who owns property and means of production in

Capitalism

Individuals

• Who owns property and means of production in

Socialism

Government

• Who owns property and means of production in

Communism

Working class

• New Deal

Legislation and programs created by FDR to promote economic and social reform during the Great Depression.

• Long-term Legacy of New Deal

it expanded the Federal Government’s role in the economy.

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

Liberal = “Hands On”

Solutions

• Increase Federal aid to poor by 

  • Deficit Spending: Government 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 

Conservative = Hands Off (Laissez-Faire)

• Solutions

  • Stimulate economy with tax breaks

  • Balance Budget

    • Reduce Federal spending

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

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

Radical = Choke Hold

• Make all citizens equally wealthy

  • Seize income from rich and redistribute it

• Government control of all business

• Herbert Hoover 

Supported Conservative 

• Huey Long

Supported Radical.

•  Governor of Louisiana 

• U.S. Senator (1932)

• “Share Our Wealth”

  • Outlaw incomes over $1 million and inheritances over $5 million

• Summarize “Keynesian” Economics

• Which political party tends to embrace this?

Deficit Spending: Govt borrows $ to start projects (construction, etc...) that create jobs for people

Liberal (Democrat)

• Summarize “Supply-Side” Economics

• Which political party tends to embrace this?

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

Conservative (Repub./Libertarian)

• Deficit Spending

Govt borrows $ to start projects (construction, etc...) that create jobs for people

• 3 Rs of the New Deal

(1)Relief & (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 programs and/or agencies are still in existence today.

FDIC

Federal Deposit Insurance Corp - Investors

-Protects investors bc it created an agency that guarantees depositors money in insured

-guaranteed individual bank accounts up to $5000

-provided stability to the economy.

Reform- still around

SEC

Securities Exchange Commission - Investors

-safer place for investments, limited margin buying and deception

-oversees stock exchange practices and requires full disclosure of financial information.

Reform- still around

CCC

Civilian Conservation Corps - Unemployed

-forest management, environmental control

-gave 3 million people a job and paid $30 a month but $25 went to their families.

Relief/Recovery-temporary jobs

WPA

Works Progress Admin - Unemployed

-employed 3.5 million people at security wages

-construction of public facilities (schools, airports, etc)

- spending on cultural programs like the arts

Relief/Recovery-Temporary jobs

NRA

National Recovery Admin - Laborers

-establish codes of fair practices that would set prices of goods, production levels, minimum wages, etc

-ends ruinous competition, overproduction, labor conflicts, and deflating prices.

Reform-ideas are still used

Social Security Act

Elderly

-committed the govt to a social welfare role by providing for elderly disabled, dependent, and unemployed.

-gave poor elderly relief payments

Reform- still around 

TVA

Tennessee Valley Authority - Unemployed 

-construction of hydroelectric power stations and fertilizers

-provides irrigation, flood control, etc

-created electricity for regions that were underdeveloped 

Relief/recovery-temporary jobs

Definition of dust bowl

a severe environmental disaster that resulted in massive "black blizzard" dust storms.

Causes of dust bowl

-Over-Farming in the 1920s

-Extended Drought

Results of dust bowl

-Massive migration of people to the Pacific Coast

-Worsened the Great Depression

Karl Marx

-Supported Command Economy, communism

-wrote The Communist Manifesto

-high level of social services and lower emphasis on economic productivity and choice.

Adam Smith

-Supported Market Economy, capitalism

-wrote The Wealth of Nations

-low level of social services and high productivity and choice.