Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Economic democracy wikipedia , lookup
Fiscal multiplier wikipedia , lookup
Participatory economics wikipedia , lookup
Steady-state economy wikipedia , lookup
Economics of fascism wikipedia , lookup
American School (economics) wikipedia , lookup
Greg Mankiw wikipedia , lookup
Post–World War II economic expansion wikipedia , lookup
Business cycle wikipedia , lookup
13.3 Economic Instability Objectives Use aggregate demand and aggregate supply to analyze the Great Depression. Use aggregate demand and aggregate supply to analyze demand-side economics. Use aggregate demand and aggregate supply to analyze stagflation. Use aggregate demand and aggregate supply to analyze supply-side economics. CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability Key Terms laissez-faire demand-side economics stagflation supply-side economics CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability SLIDE 3 The Great Depression and Before In October 1929, the stock market crashed and began what was to become the deepest economic contraction in the nation’s history. CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability SLIDE 4 Decrease in Aggregate Demand Stock market crash of 1929, grim business expectations A drop in consumer spending Widespread bank failures A sharp decline in the nation’s money supply Severe restrictions on world trade CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability SLIDE The Decrease of Aggregate Demand Between 1929 and 1933 5 Figure 13.6 CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability SLIDE 6 Laissez-Faire Laissez-faire—the doctrine that the government should not intervene in a market economy beyond the minimum required to maintain peace and property rights CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability SLIDE 7 From the Great Depression to the Early 1970s Stimulating aggregate demand Demand-side economics— macroeconomic policy that focuses on shifting the aggregate demand curve as a way of promoting full employment and price stability World War II and aggregate demand The golden age of Keynesian economics CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability SLIDE 8 Stagflation: 1973–1980 Stagflation—A decline, or stagnation, of a nation’s output accompanied by a rise, or inflation in the price level Reduction in aggregate supply Stagflation repeats in 1980 CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability SLIDE 9 Stagflation Between 1973 and 1975 Figure 13.7 CONTEMPORARY ECONOMICS © Thomson South-Western 13.3 Economic Instability SLIDE Since 1980: Improving Growth, Lower Inflation, but Higher Federal Deficits 10 Supply-side economics— macroeconomic policy that focuses on a rightward shift of the aggregate supply curve through tax cuts or other changes that increase production incentives Giant federal deficits CONTEMPORARY ECONOMICS © Thomson South-Western