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
Solving Economic Problems FDR Fiscal Policy Taxes Government Spending GDP Aggregate Demand Aggregate Supply Budgets Keynesian Economics What Caused the Great The Depression? Economic When did this economic Conditions problem occur? of the Great Who was impacted? Depression Jobs? Production? GDP? Value of the dollar (CPI)? What Caused the Great Depression? Understanding the Aggregate Demand and Supply Classical economists held that the economy (market system) would automatically adjust during times of war, severe drought, depression, etc. For example: Economic slump would lead to lower prices; people would begin buying again; and the economy would recover. The Great Depression would test this theory of self-adjustment. Understanding the Aggregate Demand and Supply Keynesian Economics stood on the principle that government intervention was needed during such severe interruptions in the marketplace. Without intervention, the economic conditions could worsen, and the market could collapse. To understand this, we must understand the Aggregate Demand /Supply model. AS A measure of the price level Price AD Real GDP A measure of the output of final goods and services. AS A total of final goods and services supplied by the American economy Price AD Real GDP A total of the measure of the output of final goods and services demanded by the American economy What happened to Aggregate Demand during the Great Depression? What causes a decrease in AD? AS Decrease in Consumer Wealth Price AD1 Real GDP Increased Taxes / Decreased Government Spending AD Decrease in Consumer Expectations Increase in Household Debt Decrease in Investment Spending What happened to Aggregate Demand during the Great Depression? AS Price AD1 Real GDP AD AS Price AD2 Real GDP AD AD1 Expansionary Fiscal Policy Increase Government Spending Tax Cuts AS Price AD2 Real GDP AD AD1 Contractionary Fiscal Policy Decrease Government Spending Increased Taxes AS Price AD2 Real GDP AD AD1 FDR’s Response Increased Government Spending The New Deal Defense Spending World War II Increases in spending allowed for increased AD. AS Price AD2 Real GDP AD AD1