Chapter16-EconomicPolicy - A.P Civics Notes Chapter 16...

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A.P. Civics Notes: Chapter 16 “Economic Policy” I. Economic Health 1. During the 1980s, people who were supposed to hate deficits voted to create more, and those who wanted tax loopholes voted to close them, but in the 1990s, tax increased (like normal). i. Most of these actions, however strange, were caused by public opinion. 2. Economic realities like the general health of the nation, the level and distribution of taxes, and the amount and kind of gov’t spending heavily influence economic policy , or how the gov’t wants to work the American economy and pay for its spending. 3. The public generally cares about what happens to it, individually, but it also cares about collective results as well, and thus forces politicians to meet both ends. i. Economic conditions often influence the success of incumbents, and voters are often worried about their own pocketbooks, voting Democratic if they’re worried about unemployment and Republican if they’re concerned about inflation and voting against the incumbent if they’re own families’ finances had gotten worse and vice versa. ii. On the other hand, voters sometimes vote against incumbents if general finances have gone down, or if the economy has worsened. iii. In both the U.S. and Europe, voters nevertheless seem to respond more to the condition of the national economy than to their own personal finances because they feel that the national economy is inter-connected, and what happens to other people could happen to them. 4. Since the 19 th century, the American gov’t has used money to affect elections, whether by giving money to faithful patrons or by increasing Social Security benefits every election year. i. The gov’t often cannot reduce employment, cut inflation, lower interest rates, and increase incomes just to win elections because it does not know how to do one w/o ruining the other. ii. Politicians must make careful, long-term choices about economic policy, since it is very hard to stimulate the economy with a snap. a. While all politicians like to have the best economic conditions, reality makes them choose which problems to tackle first (i.e. Democrats go after unemployment first).
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iii. Basically, most Democrats are more worried about unemployment than Republicans, while Republicans tend (though not as much) to worry about inflation. I. Economic Theories and Political Needs 2. Policies aimed at improving the economy as a whole are examples of majoritarian politics . 3. A healthy economy benefits almost everyone while a stagnant one helps no one, but presidents and economic policy deciders must take responsibility for whatever results that occur, since the economy is unpredictable and quite complex. 5. There are four major theories on how to best manage the economy:
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Chapter16-EconomicPolicy - A.P Civics Notes Chapter 16...

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