Chapter 17- Domestic PolicyManaging the Economy A Brief Historical OverviewManaging the Economy A Brief Historical Overview (2)FDR’s Economic PolicyFiscal PolicyManaging the Economy: Fiscal PolicyKeynesian EconomicsSlide 8Application of Keynesian EconomicsCycle of RecessionManaging the EconomyThe Federal ReserveSlide 13Federal Reserve SystemGovernment Management of the EconomyCurrent Status of Economic StewardshipA Century of US Economic GrowthDebate on Management of EconomyUS Wealth & Income DistributionDebate of Management of Economy (2) Supply Side Economics* & the “Trickle Down” EffectIndustrial Policy*Industrial Policy ChallengeNext AssignmentRegulating BusinessRegulationsObjectives of Economic RegulationImportant Events in Economic Regulation Phase IEvents in Economic Regulation Phase IIEvents in Economic Regulation Phase IIISocial RegulationSocial Regulation AgenciesProtecting Worker Safety and HealthOSHA RegulationsProtecting the EnvironmentEPA ResponsibilitiesProtecting the EnvironmentPolitical Conflict & Who is effectedEnvironmental Policy Conflict & Its ImpactFuture DirectionsDiffering Options to Protect Environment A Comparison:Social Welfare PolicyPromoting Social WelfareSocial welfare strategiesSocial Welfare ProgramsThe Evolution of Social Welfare PolicyImpact of Great Depression & the New DealNationalizing Social Welfare – A SummaryPublic Assistance ProgramsPublic Assistance Programs- problemsHealth CareCurrent Status of Social Welfare Policy1. Policies of other Industrial Democracies A Comparison2. Social Welfare vs. other types of spending3. Spending on different types of Social Welfare4. Measuring success of Social WelfareThe Future of Social Welfare PolicySocial SecurityMajor concerns with Health Care systemNext Class AssignmentChapter 17- Key TermsChapter 17- Key Terms (2)Chapter 17- Key Terms (3)11Chapter 17- Domestic PolicyChapter 17- Domestic Policy •(1).(1). Outline the various Outline the various economic theorieseconomic theories proposed for managing the economy. proposed for managing the economy.•(2). Contrast (2). Contrast fiscal policyfiscal policy and and monetary policymonetary policy, and explain the key role of , and explain the key role of ““the the FedFed.”.”•(3). Assess Government's ability to manage the economy in view of the (3). Assess Government's ability to manage the economy in view of the Lucas Lucas critiquecritique..•(4). Discuss US distribution of (4). Discuss US distribution of income & wealthincome & wealth and the role of and the role of supply-side supply-side economicseconomics..•(5). Assess whether the US should pursue an (5). Assess whether the US should pursue an industrial policyindustrial policy or remain a or remain a free free marketmarket..•(6). Describe the basic concepts & categories of how the Government regulates (6). Describe the basic concepts & categories of how the Government regulates business.business.•(7). Describe the key government (7). Describe the key government economiceconomic and and social social regulatory agenciesregulatory agencies & their & their role..role..•(8). Assess the effectiveness and projected impact of current (8). Assess the effectiveness and projected impact of current environmental policy.environmental policy.•(9). Describe the various (9). Describe the various concepts concepts andand categories categories of of Social Welfare policySocial Welfare policy..•(10). Contrast (10). Contrast social insurancesocial insurance w/w/publicpublic assistanceassistance & explain the role of & explain the role of means means testingtesting..•(11). Outline (11). Outline Social Welfare Policy Social Welfare Policy and assess impact of the and assess impact of the Social Security Act of Social Security Act of 19351935..•(12). Assess the current and future status of (12). Assess the current and future status of Social SecuritySocial Security, , WelfareWelfare, and , and Health Health PolicyPolicy22Managing the EconomyManaging the EconomyA Brief Historical OverviewA Brief Historical Overview •From Government From Government RestraintRestraint to Government to Government Intervention:Intervention:–1800 to early 1900s dominated by late 181800 to early 1900s dominated by late 18thth century economic century economic theory:theory:• Classical economicsClassical economics=> => lassez faire*lassez faire*An economic theory, dominant at the start of the twentieth century, that argued that the federal government's only role in the economy was to ensure a stable supply of money.Theory applied to Hoover’s balanced budget as solution to what major economic crisis?33Managing the EconomyManaging the EconomyA Brief Historical Overview (2)A Brief Historical Overview (2)•Start of the Start of the Great DepressionGreat Depression=> => 25% unemployment25% unemployment•1929 stock market crash=> 1929 stock market crash=> –““Hoovervilles”Hoovervilles” to protest lack of aggressive Federal action to protest lack of aggressive Federal action–Public impatient with inability of Government to fix problemPublic impatient with inability of Government to fix problem•1932 Presidential election => 1932 Presidential election => landslide election oflandslide election of FDRFDR–First Hundred DaysFirst Hundred Days => => aggressive Federal action to fix $$$aggressive Federal action to fix $$$–New DealNew Deal programs=> Federal projects & spending programs=> Federal projects & spending–ObjectiveObjective: spur economy to life=> get America back to work: spur economy to life=> get America back to work•Examine FDR’s economic policy to spur economyExamine FDR’s economic policy to spur economy44•Major economic events and actions of FDR’s Presidency:•Became President in 1933•During Great Depression the U.S. suffered 25% unemployment•Roosevelt’s Administration instituted the New Deal• At first employed public works programs.• Later used government spending to spur on the economyFDR’s Economic PolicyFDR’s Economic PolicyWhat kind of Government economic policy uses spending to spur $$$?55Using the federal government's control over taxes and spending to influence the condition of the national economy.Fiscal PolicyFiscal Policy66Managing the Economy: Managing the Economy: Fiscal PolicyFiscal Policy •Fiscal PolicyFiscal Policy => => –Government policy to Government policy to Tax and SpendTax and Spend–What economic theorist