Eco 202 FINAL.pptx - The Sixties Paul Beckner ECO 202 Prof...

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ECO 202The SixtiesPaul BecknerECO 202Prof. Peter Errera
ECO 202Ten-Year Period of U.S. Economic History Overview1960s – Most Turbulent Decade of All TimeMany events gone down in historyElection and assassination of John F. Kennedy“I Have a Dream” speech by Martin Luther King Jr.Cuban Missile CrisisCivil Rights ActFirst man on the moon (pictured)Soaring EconomyStock market boom with NO DEPRESSIONDow Jones reached 1,000 pts for first time EVER.High inflation/interest rates by end of decadePower of unions slowly fell
ECO 202GDPYearReal Gross Domestic ProductPercent Change 19603,259.9712.57%19613,343.5472.56%19623,548.4096.12%19633,702.9434.35%19643,916.2805.76%19654,170.7506.49%19664,445.8536.59%19674567.7812.74%19684,792.3154.91%19694,942.0673.12%Key: Large Percentage Change
ECO 202Impactful Events1.John F. Kennedy taking officeDeficit spending ended recessionEconomic policies improved economy and quickly2.Vietnam WarSlow troop deployment more war spendingLargely funded by tax ratesIncrease in non-military outlays3.Moon Landing (Apollo 11)Started in 1962 – end cost was estimated $176 billionCreated tons (6,300!)of new inventions (see most now!)Around 50% of Americans actually wanted to go to space
ECO 202Unemployment & Inflation19606.6%1.4%19616.0%0.7%19625.5%1.3%19635.5%1.6%19645.0%1.0%19654.0%1.9%19663.8%3.5%19673.8%3.0%19683.4%4.7%19693.4%4.7%YearUnemployment RateInflation Rate
ECO 202Unemployment & Inflation cont.Low unemployment + Low inflation + More Spending = Greater GDPJohn F. Kennedy used open market operationsHad federal agencies buy treasury notes – kept interest downKennedy pushed for lower tax cutsTax cuts = broad-based growthKennedy also created employment boon by:1.Increasing minimum wage2.Expanding unemployment benefits3.Boosted Social Security benefits4.More money for highway constructionVietnam War means more spending and inflationMilitary spending causes demand Workers go off to war supply drops inflation occurs due to lack of supply & high demandVietnam War gives employment opportunityUnemployment dips, while GDP rises
ECO 202Interest Rates19601961196219631964196519661967196819690.00%1.00%2.00%3.00%4.00%5.00%6.00%Federal Funds RateFederal Funds RateHigher GDP = Higher Interest RatesMore spending means more need for real moneyDecreasing GDP = Decreasing Interest RatesLow interest rates = more spendingMore spending = more demandIncrease demand decrease supply increase inflationHigh interest rates cause oppositeDecreased demand high supply low inflation
ECO 202Foreign Trade: Imports1960-1967:Imports increase 150%Steel, Automobiles, Textiles, Electronics1964:Meat Import Quota1965-1969:Apparel/Textile Boom!

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