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government Ch. 17 outline

government Ch. 17 outline - Clay Samford Alcerreca 8th...

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Clay Samford Alcerreca 8 th 4-3-06 Chapter 17 – Economic Policy-Making I. Politics and Economics a. U.S. – mixed economy - a system in which the government, while not commanding the economy, is still deeply involved in economic decisions. Ie) the power of Congress to regulate commerce and to coin money. b. Officeholders judged by economy – c. Bureau of Labor Statistics – Unemployment rate – the percentage of Americans seeking work who are unable to find it. This is a major job of the Bureau of Labor Statistics in the Department of Labor. This leaves out “discouraged workers.” d. Adverse economic conditions=complex social problems i. Increase in unemployment=social problems. ii. Disproportional impact on minorities e. Inflation – the rise in prices for consumer goods i. consumer price index – how gov’t keeps tabs on inflation. Also measures the change in the cost of buying a fixed basket of goods and services. ii. Inflation and fixed incomes – iii. CPI and fixed mortgages f. Elections and the economy i. Economic trends and elections – Democratic coalition worries most about unemployment. Republicans worry most about steady prices for goods and services. Repubs take stronger action to keep inflation down. Democrats take stronger action to lower unemployment. ii. Unemployment and elections – if unemployment is higher, democrats have strong base. If unemployment is not so bad but inflation is high, republicans have strong base. g. Political parties and the economy i. Republicans – again, focus on prices – tends to target interests of business and wealthy. iii. Democrats – focus on unemployment – tends to target interests of working-class people. II. Instruments for controlling the Economy a. Impact of government and the free enterprise system i. Stock market crash of 1929 – sent unemployment soaring and Hoover stuck to laissez-faire – gov’t should not meddle with the economy. ii. New Deal – FDR’s new fed. Policies that help put economy back on track.
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iii. Government intervention since New Deal – policymakers have regularly sought to control the economy. Due this through: b. Monetary Policy and the Fed i. Monetary Policy – manipulation of the supply of money and credit in private hands. 1. Monetarism – theory that believes the supply of money is the ke to the nation’s economic health. 2. monetarists and inflation – believe too much cash and credit in circulation generates inflation.
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