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Transcript
Basic economic philosophy
 A belief in the market forces
 Private initiative
 Laissez-faire
 Self-reliance
 The ”self-made” man
Adam Smith
 The Wealth of Nations
 economic philosophy based on self-interest
 the invisible hand
 self-interest results in common good
 led to rapid economic growth
1870-1929 Increasing problems
 End of the frontier
 Growth of towns
 Falling wages
 Speculation in land
 Supply exceeded demand
 Crash in 1929
 1930s Great Depression
The New Deal
 Roosevelt (Dem.) President
 Increased state intervention
 Used Keynes’ ideas
 Created jobs and subsidised farmers
 Introduced minimum wage
 Start of social security
Recovery: World War Two
 Jump-start to US economy
 US supplied the Allies
 weapons
 clothing
 food
 Unemployment disappears
 Workforce widens
 women & blacks employed in industry
Post-war expansion
 Internationalist period
 IMF, Marshall Aid, UN,
 Saving world from Communism
 Developing overseas markets
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Increase in living standards
Growth of middle class
American workers well-paid
Economic boom - 1945-1965
The difficult seventies
 Economy slowed down
 Reasons
 Competition from Germany & Japan
 Oil prices increased from 1973 (OPEC)
 Stagflation
 Falling growth & rising inflation
New departure: Ronald Reagan
 “Supply-side” economics
 Tax cuts, not subsidies
 Backed by Milton Friedman
 Did not cut government spending
Triple deficit
Budget deficit
government spent more than it received
National debt
accumulation of budget deficits
Trade deficit
imports exceeded exports
US Economy today
 Economy looking strong
 High productivity
 Low inflation
 High employment
 Budget surplus
Economic strengths
 Strong currency
 International influence
 Strong agricultural sector
 Cutting edge technologies
 Huge domestic market
 Excellent communications network
 American mentality
Threats
 International instability
 Trade deficit
 Wealth gap
 Social issues
 Risk of inflation