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Economic growth: 1960’s Juan Aviles ECO 202 Milestone One Professor 10/3/2015 ECO 202 Introduction • Real Gross Domestic Product and Growth Rate 1960-1969 • Historical events that impacted the U.S economy during this period. i. Great Society Initiative ii. Tax policies review • Unemployment and Inflation rate during this period • Interest rates fluctuations thought 1960-1969 and their impacts ECO 202 Ten-Year Period of U.S. Economic History Overview • Real Historical Gross Domestic Product (GDP) and Growth Rates of GDP 1960-1969 YEAR 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 Real GDP (Billion s of 2009 dollars ) 3,108.73,188.1 3,383.1 3,530.4 3,734.0 3,976.7 4,238.9 4,355.2 4,569.0 4,712.5 Real GDP Growth Rate 0.86 6.37 4.28 5.18 5.15 8.48 4.51 2.70 4.97 2.07 ECO 202 Events that impacted the U.S. economy 1960s • Reviewing of Tax Policies • Great Society Initiative ECO 202 Unemployment and Inflation Rates between 1960-1969 YEAR S 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 INFLA 1.03 TION RATES 1.71 0.67 1.33 1.64 0.97 1.92 3.46 3.65 4.40 UNE 5.5 MPLO YMEN T RATES 6.7 5.5 5.7 5.2 4.5 3.8 3.8 3.6 3.5 ECO 202 Interest Rates Fluctuation During the 1960s DATES INTERS T RATES % AUGUST 23, 1960 4.5 December 6, 1965 5 March 10, 1966 5.75 August 16, 1966 6 January 26, 1967 5.75 November 20, 1967 7.6 April 19, 1968 6.5 December 18, 1968 6.8 January 7, 1969 7 March 17, 1969 7.5 June 9, 1969 8.5 ECO 202 Conclusions • Gross domestic product is the broadest pointer of financial development and advancement • Genuine GDP dependably consider inflation in this way, permitting correlation against other chronicled time periods ECO 202 Fiscal Policies Juan Aviles ECO 202 Milestone Two Professor 16 OCT 15 ECO 202 Fiscal Policies Adopted by U.S. Government between 1960-1969 • Adjustments in Business and Personal taxes. • Government Procurements • Transfer Payments. ECO 202 Adjustments in Business and Personal Taxes • Revenue Act of 1962. • Revenue Act of 1964. • Tax Adjustment Act of 1966. • Revenue and Expenditure Control Act of 1968. • Tax Reforms Act of 1969. ECO 202 Government spending Examples of Government expenditures: National Defense discretionary expenditures ECO 202 Transfer Payments For example: Social securities Welfare benefits ECO 202 Conclusions • Fiscal policies adopted in 1960s had a positive impact on the U.S. Economy. • Since 1960, Government spending continually increased over the decade. • Transfer payments expenditure rose sharply in absolute terms as well as percentage of real GDP from 1960. • During these period the government kept on reviewing tax policies as it considered tax as the major tool to control the economic activities. ECO 202 Monetary Policies Juan Aviles ECO 202 Milestone three Professor 26 OCT 15 ECO 202 Monetary policies This presentation examines the Monetary Policy in the 1960s, the most often utilized monetary policy to reinstate the economy. Monetary Policy refers to the process where the Federal Reserve attempt to control the money supply by use of various tools. ECO 202 Monetary policy tools • Instruments that initiate monetary policy. i. Open market operations ii. Reserve Ratio iii. Discount Rates ECO 202 Open markets operations • Refers to the procurement or sales of bonds by the Federal Reserve in the open market. • Expansionary policies- the fed purchases the bonds. • Contractionary policies entails selling of the bonds. • Stimulation and accommodation policy of 1969. ECO 202 Discount rates • Discount rate is the interest rate charged by federal reserve to banks that borrow or lend from it. • For Expansionary policies the discount rates are lowered. • For contractionary policies the discount rates are raised. ECO 202 Reserve ratio • Designed to change the least aggregate of reserves the bank ought to hold. • To take expansionary policies the Fed is forced to reduce the reserve ratio. • For contractionary policies the Fed increases the reserve ratio. ECO 202 References • • • • • • Bartlett, B. (2012). The Benefit and The Burden: Tax Reforms. Cambridge : Cambridge University Press. Boccia, R. (2014, October 17). Eliminating Waste and Controlling Government Spending. Retrieved October 13, 2015, from The Heritage Foundation: http://www.heritage.org/research/reports/2014/10/eliminating-waste-and-controllinggovernment-spending Boyes, W. J., & Melvin, M. (2013). Economics. Australia : Cengage Learning South-Western. Furchtgott, D. (2013, November 11). Lesson from John F Kennedy on Tax. Retrieved September 29, 2015, from Economics21: http://www.economics21.org/commentary/6lessons-jfk-tax-policy Higgs, R. (2011, February 1). The Economics of the Great Society . Retrieved September 28, 2015, from The Independent Institute: http://www.independent.org/issues/article.asp?id=3157 Interest Rates History. (2008, December 16). Retrieved September 29, 2015, from Fed Prime Rates: http://www.fedprimerate.com/wall_street_journal_prime_rate_history.htm ECO 202 References • • • • • • • • Madura, J. (2014). International financial management. Australia: South-Western. M.A.Akhtar. (1997). Understanding Open Market Operations. Economics Journal , 25-47. McEachern, W. A. (2014). Macroeconomics : a contemporary introduction. Mason, OH: South-Western Cengage Learning. Meulendyke, A. M. (1998, May 25). U.S. Monetary Policy & Financial Markets. Retrieved October 24, 2015, from St. Louis Fed Research Organization: https://research.stlouisfed.org/aggreg/meulendyke.pdf Musgrave, R. A. (2004). U.S. Fiscal Policy, Keynes and Keynesian Economics. Cambridge: Cambridge University Publishers. Tax Legislation 1960-1969. (2014, September 12). Retrieved October 13, 2015, from Tax Policy Centre: http://www.taxpolicycenter.org/legislation/1960.cfm The Discount Rate. (2014, December 12). Retrieved October 24, 2015, from Federal Reserve Bank: http://www.federalreserve.gov/monetarypolicy/discountrate.htm Timberlake, R. H. (2013, June 3). The Concise Encyclopedia. Retrieved October 24, 2015, from Federal Reserve System: http://www.econlib.org/library/Enc/FederalReserveSystem.html ECO 202 References • • • U.S Department of Commerce. (2014, September 29). BEA National Economic Accounts. Retrieved September 28, 2015, from Bureau of Economic Analysis: http://www.bea.gov/national/index.htm#gdp United State Department of Labor. (2014, June 14). Bureau of Labor Statistics Data. Retrieved October 29, 2015, from BLS : http://data.bls.gov/pdq/SurveyOutputServlet Wessels, W. J. (2011). Business and Economics. Hauppauge, NY: Barron's. ECO 202