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Motivation: Examine the images at your desk and complete the activity on the front your hand out. Get into your pre-determined groups. Work as a team. Aim: How should the conditions of the Great Depression influence government responses? Vocab John Steinbeck, The Grapes of Wrath Rugged Individualism Hoover vs. FDR “Brother, Can You Spare a Dime?” – by E.Y. Harburg and J. Gorney, 1930 Deflation Inflation Stock Market Crash Hoovervilles Tickle Down Economics Pump-Priming Economics Drought (1931) Dust Bowl (1933) Existing Conditions: Deflation A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal, or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum. Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind. Existing Conditions: Inflation The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. The government can increase inflation by increasing the amount of money in circulation so that more people have money to use, and to pay the higher prices for goods and services. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum. As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year. Most countries' central banks will try to sustain an inflation rate of 2-3%. Essential Questions: (1) What were the social and cultural effects of the Great Depression? (1) How should political leadership respond to the Great Depression? Problems: • Unemployment: 25% (1 out of 4 white men unemployed). African Americans: 50% (2 out of 4). • Children – child labor was back, didn’t attend school, hunger, cold. • Dust Bowl – limited irrigation, high winds, dirt, dangerous, Great Plains/Midwest unlivable. • Many Migrants, especially from the plains, driving out west (CA), created Hoovervilles – homes out of trash. • Elderly – no pensions, so retirement, not enough money to support themselves. • Food was rationed/difficult to transport • Everyone in the family had to participate in the economic sphere/couldn’t afford to be sick. • John Steinbeck: Grapes of Wrath – popular novel about the Depression. Takes place in the Midwest, tells the story of a migrating family. RURAL experience. Streets the day the NY stock market crashed A crowd gathers outside New York’s American Union Bank during a bank run in 1931. Hungry Americans waiting in line for food during the Great Depression Unemployment line in New York City The Elderly Hoovervilles Farmers Activity: You are running for President! Look at the documents and with your Teams create an economic-social plan that will work for the nation in need. Your plan must include: (a)4 bullet pointed specific solutions to specific problems. (b)What agency/program/law will be used to make those solutions a reality? (c)Your team must be able to argue your plan. Create a T-Chart What were the principles/approaches offered by each Presidential Candidate? Hoover FDR FDR “Priming the Pump” VS HOOVER “Trickle Down” GOV’T Creates programs to give people Government gives money to business. jobs Everyone has more $ Businesses build more factories More $ = People buy more goods New Factories = More Jobs More investment in business Increased Production Businesses build more factories Everyone has more money New Factories = New Jobs People can buy more items and fix the Business making more $, which fixes the economy. economy. How did Hoover’s and FDR’s plans measure up according to popular opinion? Keynesian Economics or Laissez Faire? (FDR OR HOOVER – Election of 1932) • • • • Individual Work: Write a thesis statement about which candidate you would vote in Give three pieces of evidence to defend your choice. Present a counter-claim and argue against it. Concluding Sentence. ✔+ Strong clear thesis statement, 3 analytical arguments with specific evidence. Thoughtful counter-claim and rebuttal. Concluding sentence. ✔ Clear thesis, at least 2 analytical arguments made with each document, one counter claim, no concluding sentence ✔- Missing a thesis/missing evidence/missing the counter claim. Can government intervention, oversight, and regulation solve the problems of an economic depression? President Obama Wants More Oversight and Regulations on Business "Taken together, we are proposing the most ambitious overhaul of the financial system since the Great Depression. But I want to emphasise that these reforms are rooted in a simple principle: we ought to set clear rules of the road that promote transparency and accountability. That's how we'll make certain that markets foster responsibility, not recklessness, and reward those who compete honestly and vigorously within the system, instead of those who try to game the system. First, we're proposing new rules to protect consumers and a new consumer financial protection agency to enforce those rules. This crisis was not just the result of decisions made by the mightiest of financial firms. It was also the result of decisions made by ordinary Americans to open credit cards and take on mortgages. And while there were many who took out loans they knew they couldn't afford, there were also millions of Americans who signed contracts they didn't fully understand offered by lenders who didn't always tell the truth.” http://www.npr.org/2012/10/08/1624 00400/obamas-jobs-plan-focuses-onfederal-investment