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10 3 13 Concepts 5 Economic Goals Fiscal Policy Monetary Policy Goals of Policy 1 Strong Economy Inflation prices increase Consumer Price Index CPI measures inflation Basket of goods in one year compared to basket in a previous year Inflation is caused by an increase in money if you print more money things get more expensive 1 Economic Growth Gross Domestic Product GDP measures economic growth Real GDP adjusted for inflation per capita is the most important form Higher GDP producing more producing more earning more Great Recession 2008 3 consecutive quarters of negative growth means a recession we had 6 Largest decline of GDP per capita since the Great Depression 1 Unemployment Rate Lags behind GDP growth but still is a strong indicator 4 Balance of Trade The amount of stuff we re exporting vs the amount of stuff we re importing Should be positive we should be exporting more than we import 5 Managing Deficits and Debt Debt is total money borrowed Budget Process Assumptions and Planning Agency Budget Development OMB Budget Review Congressional Review Budget Execution and Control 10 8 13 Concepts Fiscal Policy Monetary Policy Tax Policy Entitlement Spending Fiscal Policy The sum of all taxing and spending policies Keynesian Economics fiscal policy can help eliminate swings in domestic growth FDR Spend your way out of a recession Countercyclical gov spending should be the exact opposite of the economy Income taxes Supply Side Economics this short term solution won t work focused on longterm growth Reagan Monetary Policy The tools of the Federal Reserve Fed buys treasury bonds buy printing new money Tax Policy Policies that determine compulsory contributions to the government for different actions Sales taxes Property Taxes Capital gains taxes taxes on investments Tax breaks deductions and exemptions Flat taxes progressive taxes and regressive taxes Progressive taxes are meant to lessen inequality Entitlement Spending Mandatory spending programs anyone who applies and matches a legislated list of criteria has a legal right to automatically receive benefits Social Security Medicare Medicaid Unemployment Compensation Food Stamps 64 of federal budget 10 10 13 EU Crisis Economic and political union of 28 member states in Europe Economic common monetary policy largely separate fiscal policies European Central Bank monetary policy Political some powers give to EU some kept by members EU monetary policy shared environmental policy Crash caused by US 10 15 13 Concepts Health Care Trends Market Failures in Health Care Single Payer Tort Reform Heath Care Trends We spend the most of any country on health care both in dollars and percentage of income We have one of the worst healthcare systems Market Failures in Health Care Information asymmetries in insurance Patients are often unable to distinguish between effective helpful health care and ineffective wasteful care Physician incentives Patients don t know the appropriate price for different treatments Most hospitals are natural monopolies Monopsony one buyer in contrast to the one seller in a monopoly on large buyer has control of the market priced paid by Medicare Medicaid usually much lower prices paid by large private insurance companies are usually lower 10 17 13 Concepts Medicare Medicaid Single Payer Patient Protection and Affordable Care Act Obamacare Insurance Mandate Employer Mandate Individual Mandate Medicare and Meicaid Medicare public health insurance for senior citizens 65 years Part A all receive hospital visits Part B suplemental routine exams wellness visits Part C 3rd party subsidized insurance 2003 Part D prescription drugs 2003 Coverage gap Medicaid public health insurance for poor and disabled Before this year those at poverty line were eligible Pays half the costs but varies from state to state Some states pat prescription others do not Single Payer System Government provides insurance for all residents citizens and pays all health care expenses except for copays and coinsurance Providers may be public private or a combination of both Insurance Mandate Government mandates that citizens purchase insurance whether from private public or non profit insurers Individual mandate applies individuals Employer mandate applies to employers The Affordable Care Act Employer Mandate Business with more than 50 employees must provide insurance to all full time workers 30 hours a week delayed a year Individual Mandate Healthcare Exchanges State Consumer Assistance Programs Insurance reforms and regulations Ends lifetime and yearly dollar limit on coverage No denial for pre existing conditions Parental insurance covers young adults under 26 Subsidies and tax credits Strengthen Medicare close prescription drug coverage gap Expand Medicaid Families 138 above poverty line or 33 000 for a family of four Expand preventative care Shortcomings of Law Enrollment what if people just pay the tax especially the young and those ineligible for Medicaid Will people purchase the right plan 25 states have not expanded Medicaid affecting 8 million poor How will employers respond to the mandate to provide insurance to full time workers Will people who are dropped from company insurance purchase equivalent coverage 10 22 13 Concepts Means tested Programs Poverty Line Supplemental Nutrition Assistance Program SNAP food stamps TANF Temporary Assistance to Needy Families Social Welfare Policy Goals Provide minimum standard of living Meet basic needs Create opportunities for viable employment Protect vulnerable from exploitation National Academy of Science New Poverty Formula Proposed Broader measure taking much more into account Costs of living like medical costs for elderly Benefits already received Geographic variations Implications of Income Inequality Worldwide Issue Recent News Is growing inequality a problem What is the root cause Why do people get angry when talking about inequality What should government do about it Poverty s Impact on Life Fail to meet basic needs Academic achievement Fewer opportunities Greater barriers Major US Programs to Help the Poor Social Welfare Programs Means Tested Programs We don t pay into a common welfare fund like Social Security Income redistribution program Food Programs WIC SNAP free reduced school lunch Cash Benefit TANF SNAP Administered by states Electronic coupons based on size of family 194 family average Must be seeking employment Eligibility complicated to apply Free and Reduced Lunch Federal School LUnch and


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FSU PUP 3002 - Lecture notes

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