Download Economic Policy - "Should we talk about the government?"

• As you watch the video, think about:
• What are the connections between what you see in the video and
what you’ve already learned about the Federal Budget?
http://media.pearsoncmg.com/ph/hss/SSA_SHARED_MED
IA_1/polisci/presidency/Seg2_EconomicPolicy_v2.html
Two Major Worries:
Unemployment and Inflation
 Unemployment rate
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10% in Great Recession
Underemployment rate
Tracked by Bureau of Labor Statistics (BLS)
What are the conservative and liberal views on how to
deal with high unemployment?
 Inflation
 Rise in price of goods and services
 Consumer price index (CPI)
 Averages 4%
Policies for Controlling the
Economy: Monetary Policy
 Monetary policy and the “fed”
 Federal Reserve Board
 Meets in secret; not accountable to Congress
 Manipulates the amount of money and credit in
circulation
 Too much money and credit leads to inflation, too little
leads to economic stagnation
 Lowering interest rates (adding to the amount of credit
available) can be a major stimulator of economic
growth
 What are the liberal and conservative viewpoints on
monetary policy?
Policies for Controlling the
Economy: Fiscal Policy
 Laissez-Faire Economics
 Fiscal policy
 Taxing, spending, borrowing
 Keynesian economic theory
 Supply-side economics
 What are the liberal and conservative
viewpoints on fiscal policy?
How the Obama administration’s
predictions of the impact of the 2009
stimulus plan went awry
Why It Is Hard to Control the
Economy
 “Political business cycle”
 Presidents attempt to control the economy to win
elections
 Private sector dominates the economy
 Federal government is ¼ of GDP
 Impact of government policies is not only limited, but
usually gradual
• Free Trade
• Belief that economic barriers between nations should be
decreased, in order to facilitate the exchange of goods and
services
• Theory is that trade ultimately benefits all parties involved
• Some see increased trade as inevitable, as a result of
globalization
• Major Trade Deals: NAFTA, GATT, TPP
• Economic Protectionism
• Belief that government policy should aim to protect American
industries and workers from foreign competition
• What specific policies have we seen or heard about recently?
What other protectionist policies are available?
• What are the conservative and liberal viewpoints
on trade policy?