chapter 07 - 1 EconomicPolicy 2 Outline...

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Economic Policy 1
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Outline Goals of economic policy  economic growth, stable prices, low unemployment, positive  balance of payments, management of deficits and debt Instruments of economic policy fiscal policy, monetary policy, others Tax policy Budget process Budgetary actions and challenges Focused discussion: Addressing the Deficit 2
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Importance of Economic Policy Economic policy is 3
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Goals of Economic Policy 1. Economic growth 2. Full employment 3. Stable prices 4. Positive balance of payments from international trade 5. Management of deficits and debt 4
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Economic Growth Increase in the production of goods and services  each year  (GDP: gross domestic product) Benefits A “zero-sum society” occurs when little growth no program gains or resources from one taken to give to another redistribution of wealth causes more conflict 5
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Full Employment Jobs can substitute for social welfare programs Unemployment influences budgets Unemployment not distributed evenly, e.g., by race and age   African Americans (10% 2004) and young Americans  (12% 2004) are disproportionately affected Change in job sectors (different jobs, more two-income  households) 6
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Table 7-1 Labor Force Participation for  Females, 1970-2007 Year Rate 1970 43.3% 1975 46.0% 1980 51.3% 1985 54.7% 1990 58.0% 1995 59.4% 2000 60.6% 2005 60.4% 2007 60.6% 7
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Low Levels of Inflation Inflation: an increase in the cost of goods and services affects all citizens The performance of the U.S. in stabilizing prices has been  good (2-4%) Measured by Consumer Price Index (CPI) represents average change in price over time of a variety of  goods and services  8
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The Consumer Price Index (p.194) Category of Goods Examples Food and beverages
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This document was uploaded on 10/27/2011 for the course POLS 2302 at Texas Tech.

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chapter 07 - 1 EconomicPolicy 2 Outline...

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