Reaganomics = supply side/trickle down economics Cut taxes, especially for the wealthy and big business. Cut govt spending. No govt deficit. Keynesian.

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Presentation transcript:

Reaganomics = supply side/trickle down economics Cut taxes, especially for the wealthy and big business. Cut govt spending. No govt deficit. Keynesian = demand side economics Cut taxes for the middle and lower classes. Increase govt spending to increase jobs. Don’t worry so much about a deficit.

Done through government. Congress Department of the Treasury Government use of spending and taxing to influence the economy. Trying to promote: Price stability Employment Economic growth Department of the Treasury Carries out the President’s priorities in regards to this. In charge of minting money; collecting taxes; manage federal finances & public debt; pay U.S. bills.

Controlling the supply of money. The economy MUST have money and access to money to grow. Done through the Federal Reserve. Appointed by Pres, but can’t be replaced during tenure. The members and chair are non political. Want to influence inflation, economic growth, unemployment, and exchange rates. This is done through: Interest rates: sets the key interest rates for banks. Reserve requirements: how much $ banks must have. Currency peg: setting foreign exchange value. Discount window: discount rates for banks to borrow. Quantitative easing: buying or selling govt bonds to control the amount of money available.

Two quarters of negative GDP growth. GDP (Gross Domestic Product): everything produced within a country. US is biggest at about 17 trillion. China is catching up (a lot more gov help). GDP is important indicator of overall economic health. Recessions are a normal occurrence of a free market capitalist economy. Often come about because of holes in the system, lack of regulation, problems we didn’t anticipate. Great Depression: stock market crash and no help from the Fed..Com bubble: overvalued stocks of internet companies. The bubble always bursts. The Great Recession Home price bubble Easy lending standards Credit default swaps

1. Is having banks that are too big to fail a bad thing? Why? Why not? 2. Based off of this information how much influence does the President have over the economy?