10 th american history u.s. economic history. handy dandy guide to economic thinking choose $ 1....
TRANSCRIPT
1010thth American History American History
U.S. Economic HistoryU.S. Economic History
Handy Dandy Guide to Economic Thinking$ 1. People choosechoose to do the things they think are best for
them. $ 2. People’s choices have costschoices have costs. $ 3. People choose to do the things for which they are choose to do the things for which they are
rewarded.rewarded. (People respond to incentivesPeople respond to incentives)- such as money.$ 4. People create rulescreate rules that affect their choices and how they
act. (People create ECONOMIC SYSTEMS that influence individual choices and incentives.)
$ 5. People gaingain when they freely decide to trade with one another. Free trade creates wealth.
$ 6. People’s choices today have future resultsfuture results. People often live for tomorrow.
Economic Questions
$What is economicseconomics?$ EconomicsEconomics:The study of choice and decision-making in a world
with limited resources.$ Economic GrowthEconomic Growth: A sustained increase in total output or output per
person for an economy over a long period of time.$ Economics is based on two factsEconomics is based on two facts:
$ 1. Society's material wants are virtually unlimited or insatiable$ 2. Economic resources are scarce
$ Economic resourcesEconomic resources are all natural, human, and manufactured resources that go into the production of goods and services:
$ 1. Land and all "gifts of nature" (arable land, forests, mineral deposits)
$ 2. Capital: all manufactured aids to production (tools, machinery)$ 3. Labor: all physical and mental talents of men and women.$ 4. Entrepreneurial Ability: entrepreneurs have initiative, make
basic business-policy decisions, be innovative, and take risks
Economic Questions
$ What is economicseconomics?
$ Economic SystemsEconomic Systems -The way a society organizes the production, consumption, and distribution of goods and services.
$ Market EconomyMarket Economy -An economic system where most goods and services are exchanged through private transactions by private households and businesses. Prices are determined by buyers and sellers making exchanges in private markets.
Economic Questions
$ What are goods, services and resourcesgoods, services and resources?
GoodsGoods-Objects that can be held or touched that can satisfy people’s wants.
ServicesServices- Activities that can satisfy people’s wants.
ResourcesResources-All natural, human and human-made aids to the production of goods and services. Also called productive resources.
Natural Resources-"Gifts of nature" that are present without human intervention (also called land). Human Resources-The quantity and quality of human effort directed toward producing goods and services (also called labor). Capital Resources-Goods made by people and used to produce other goods and services (also called intermediate goods).
Economic Questions
$ What is supply and demandsupply and demand?
$ DemandDemand - A schedule of how much consumers are willing and able to buy at all possible prices during some time period.
$ SupplySupply - A schedule of how much producers are willing and able to produce and sell at all possible prices during some time period.
$ Equilibrium PriceEquilibrium Price - The market clearing price at which the quantity demanded by buyers equals the quantity supplied by sellers.
Economic Questions
$ What are unemployment, shortages unemployment, shortages and surplusesand surpluses?
$ UnemploymentUnemployment - The situation in which people are willing and able to work at current wages but do not have jobs.
$ ShortagesShortages- The situation resulting when the quantity demanded exceeds the quantity supplied of a good, service, or resource.
$ SurplusesSurpluses -The situation resulting when the quantity supplied exceeds the quantity demanded of a good, service, or resource, usually because the price is for some reason above the equilibrium price in the market
Economic Questions
$ What are producers, consumers and marketsproducers, consumers and markets?
Production/ProducersProduction/Producers- People who use resources to make goods and services, also called workers.
ConsumersConsumers-People whose wants are satisfied by using goods and services.
MarketsMarkets-Any setting where buyers and sellers exchange goods, services, resources, and currencies.
Economic Questions
$ What are stocks, bull markets and bear stocks, bull markets and bear marketsmarkets?
StocksStocks- Ownership of a corporation represented by shares that are a claim on the corporation's earnings and assets.
Bull MarketsBull Markets-prolonged period in which investment prices rise faster than their historical average. Bull markets can happen as a result of an economic recovery, an economic boom, or investor psychology. The longest and most famous bull market is the one that began in the early 1990s in which the U.S. equity markets grew at their fastest pace ever
Bear MarketsBear Markets-A prolonged period in which investment prices fall, accompanied by widespread pessimism. Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly. The most famous bear market in U.S. history was the Great Depression of the 1930s
Economic Questions
$ What is MoneyMoney? Medium of ExchangeMedium of Exchange: Money allows people to avoid the
complications of barter. For example, a bookseller does not want to be paid in bagels because others may not accept bagels as a means of trade. Money is convenient because it is accepted by all.
What gives money it's value?What gives money it's value? Everybody accepts it Legal Tender - currency has been designated as legal tender
by government, which means it must be accepted as payment
Relative Scarcity - money derives its value from it's scarcity relative to utility
Economic Questions
$ What is profitprofit?
$ ProfitProfit - The difference between the total revenue and total cost of a business; entrepreneurial income- (The human resource that assumes the risk of organizing other productive resources to produce goods and services.)
Economic Questions
$ What is GDPGDP?$ GDP is Gross domestic productGross domestic product. For a region, the GDP is “the market value of
all the goods and services produced by labor and property located in the region, usually a country”.
GDP measures the market value of annual output
It is a monetary measure
GDP includes only market value of final goods and ignores transactions involving intermediate goods to avoid double counting. Intermediate sales of goods are all the steps before the final selling of the good. For an example the cotton to make a shirt may be sold to the shirt manufacturer but it is not counted in the GDP because the cotton was an intermediate good…the final good is the shirt.
Economic Questions
$ What is inflationinflation?$ InflationInflation: Inflation is a sustained increase in the average price level,
or general rise in the price of the entire economy. Tight Money PolicyTight Money Policy:This policy is exercised in times of inflation.
Components:1). Selling securities to banks and the public. 2). Increase the Federal Funds Rate. 3). Increasing the Discount Rate. 4). Increase the Reserve Ratio
Easy Money PolicyEasy Money Policy: This monetary policy is used when the economy is faced with recession and unemployment.
Components: 1.) Buy Securities from commercial banks and public. 2.) Reduce the Federal Funds Rate. 3.) Lowering the Discount Rate. 4.) Reduce the Reserve Ratio
Economic Questions
$ What are TaxesTaxes?$ TaxesTaxes- Required payments of money made to
governments by households and business firms. $ Income TaxesIncome Taxes - Taxes paid by households
and business firms on the income they receive.
$ Property TaxesProperty Taxes - Taxes paid by households and businesses on land and buildings.
$ Sales TaxesSales Taxes - Taxes paid on the goods and services people buy.
Economic Questions
$ What is a depressiondepression? There’s an old joke among economists that states: A recession is when
your neighbor loses his job. A depression is when you lose your job. A depressiondepression is any economic downturn where real GDP declines by
more than 10 percent. A time of economic crisis or bad times in commerce, finance, and industry, characterized by falling prices, restriction of credit, low output and investment, many bankruptcies, and a high level of unemployment (many people without jobs). The last depression in the United States was from May 1937 to June 1938, where real GDP declined by 18.2 percent.
A recessionrecession could be defined as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. By this definition, the average recession lasts about a year. A recession is an economic downturn that is less severe.
Economic Questions
$ What precisely is the national debtnational debt?$ It's the total amount of funds that the federal government has borrowed over It's the total amount of funds that the federal government has borrowed over
the years and not yet repaidthe years and not yet repaid. And what about the deficitdeficit? That's the amount that the government spends each
year in excess of what its tax, tariff, and fee revenues bring in. The government then must borrow to make up the difference. It's the accumulation of deficits year after year that makes up the total national debt.
Why do we have deficits? Because the government makes commitments to spending programs without raising enough revenue to pay for them. Therefore, the government has to borrow.
How does the government borrow money? Does it just go to the bank? No. The U.S. Treasury issues securities, or IOUs, such as savings bonds and Treasury bills, notes, and bonds. Lenders buy these securities and the money goes to the government. In return, the government pays interest to the owners of the securities.
Economic Questions
$ National National $ DebtDebt?
Economic Questions$ National Debt Clock (Hyperlink)$ Wow! When did the debt get so big? Well, for the past two decades the net debt has
risen very rapidly. At the end of fiscal 1973, it was about a third of a trillion dollars; in 1983, a little over $1 trillion; and in 1993, it was more than $3 trillion. The government has been increasing its spending ––particularly on such items as Social Security, Medicare, and, for a time, national defense –– at a rate faster than revenues have been growing. Also, there is a snowball effect resulting from each increase in the debt: as the debt expands, so do the interest payments.
$ Anything else? In addition, the inflation and high interest rates of the 1970s and early 1980s contributed to the rapidly growing debt. Even with inflation and interest rates declining in recent years, the debt has not been reduced, because spending has continued to outpace revenues.
$ Has the debt always been rising? The first great surge in the national debt was caused by U.S. participation in World War I. By the time the war ended in 1918, the debt had increased from a little over $1billion to about $15 billion. The second surge took place during the Great Depression. There was high unemployment and, therefore, less taxable income. New social programs meant that the government had to borrow in order to finance increased spending. As a result, the debt climbed to almost $50 billion by the start of World War II.
$ What does "fiscalfiscal" mean? For budget purposes, the government year runs from October 1 to September 30; this is a called a fiscal year. For example, the 1996 fiscal year starts October 1, 1995, and ends September 30, 1996.
Test your economic IQ
How much do you know about our how our economy works and how it affects you? According to the National Council on Economic Education, the average graduating H.S. student should be able to score 100% on the following quiz. Can you?
#1
The town of Bedford Falls wants to buy four new police cars. The opportunity cost of buying the police cars is the:
(a) cost of buying the cars now vs. buying them later.
(b) ability to make more arrests and reduce the total annual crime rate.
(c) other desirable goods or services that must be given up to buy the cars.
(d) dollar cost of the new cars.
Answer for #1
COpportunity Cost: the next best alternative
that must be given up when a choice is made.
#2
The bestbest measure of the economy’s performance is:
(a) the unemployment rate.
(b) gross domestic product.
(c) consumer price index.
(d) Dow Jones industrial Average.
Answer for #2
BGross Domestic Product (GDP): The market
value of all final goods and services produced in the economy in a given period of time.
#3
The best definition of profitprofit is:
(a) total assets minus total liabilities.
(b) total sales minus total taxes.
(c) total revenues minus total costs.
(d) total sales minus total wages.
Answer for #3
CProfits: total revenues from exchange
minus total costs associated with production of a good or service. Profits are the resource payment to the entrepreneur or the owners of a business enterprise.
#4
Gross Domestic ProductGross Domestic Product is a measure of:
(a) total market value of all final goods and services produced in one year.
(b) the price level of goods and services sold in one year.
(c) the total amount of refrigerators, washing machines and other household appliances produced in one year.
(d) the total amount of goods and services produced by private companies in one year.
Answer for #4
AGross Domestic Product (GDP): The market
value of all final goods and services produced in the economy in a given period of time.
#5
Who would benefit from an unexpected 10% inflation rateunexpected 10% inflation rate?
(a) Sam, who has $5,000 in a savings account.
(b) Maria, who has a $5,000 life insurance policy.
(c) John, who loaned Bonnie $5,000 last year.
(d) Bonnie, who borrowed $5,000 from John and must pay it back this year.
Answer for #5
DBonnie would benefit. Inflation is a
sustained increase in the average price level, or general rise in the price of the entire economy. She benefits because even though prices go up, her loan rate and amount will remain the same. Cheap money.
#6
Who would benefit if the U.S. dollar dollar becomes stronger against the Japanese Yenbecomes stronger against the Japanese Yen?
(a) a Japanese company selling products in the U.S.
(b) a U.S. company buying a building in Japan.
(c) a U.S. tourist taking a two week vacation in Japan.
(d) all of the above.
(e) none of the above.
Answer for #6
DThey all benefit. This has to do with
exchange rates: the price of a nation’s currency in terms of the currency of another nation.
#7
The limit of the economy’s real outputlimit of the economy’s real output at any time is set by:
(a) the quantity and quality of human and natural resources and capital goods.
(b) the total amount of money, stocks, and bonds in circulation.
(c) business demand for goods and services. (d) the amount of government spending and
taxes.
Answer for #7
AEconomic resources: land, labor,
capital goods and entrepreneurs.
#8
If your annual moneyannual money income goes up 10%, while the prices of what you buy go up 20% then:
(a) your real income has risen.
(b) your real income is unchanged.
(c) your real income has fallen.
(d) you’re shopping in the wrong stores.
Answer for #8
CReal Income: money income adjusted to
compensate for inflation.
#9
Three major productive resources are natural and human resources and capital goodsnatural and human resources and capital goods. Which best illustrates these three productive resources?
(a) rent, workers and money. (b) iron ore, taxi drivers and bonds. (c) farmers, importers, and exporters. (d) oil, engineers, and drills.
Answer for #9
DEconomic resources: land, labor, capital
goods and entrepreneurs.
#10
Nation A grows bananas and Nation B produces cheese. If they exchange exchange bananas and cheesebananas and cheese:
(a) Nation A gains and Nation B loses. (b) Nation B gains and Nation A loses. (c) Both Nations lose. (d) Both Nations gain.
Answer for #10
DThey both benefit. This has to do with
international trade: the exchange of goods and services between people and institutions in different countries.
#11
True or FalseTrue or False: Most millionaires are college graduates
Answer for #11
TrueTrueFour of five millionaires are college
graduates. Eighteen percent have Master’s degrees, eight percent law degrees, six percent medical degrees and six percent Ph.D.’s.
#12
Most millionaires work fewer than 40 hours a week.
Answer for #12
FalseFalseAbout 2/3 of millionaires work 45-55 hours a
week.
#13
More than half of all millionaires never received money from a trust fund or estate.
Answer for #13
TrueTrueOnly 19% of millionaires received any
income or wealth of any kind from a trust fund or an estate. Fewer than 10 % of millionaires inherited 10% or more of their wealth.
#14
Most millionaires work in glamorous jobs, such as sports, entertainment, or high tech.
Answer for #14
FalseFalseA majority of millionaires are in ordinary
industries and jobs. They are proficient in targeting marketing opportunities.
#15
Many poor people become millionaires by winning the lottery.
Answer for #15
FalseFalseFew people get rich the easy way. If you play the lottery,
the chances of winning are about 1 in 12 million. The average person who plays the lottery every day would have to live about 33,000 years to win once. In contrast, you have a 1 in 9 million chance of being struck by lightning. A pregnant woman has one chance in 750,000 births to have quadruplets. How many sets of quadruplets do you know?
Time spent on the job
If you work from the time you’re 21 years old, until you’re 70 years old, If you work from the time you’re 21 years old, until you’re 70 years old, you’ll work you’ll work 49 years49 years..
If you work an average of 50 weeks for each of those 49 years, you’ll If you work an average of 50 weeks for each of those 49 years, you’ll work work 2450 weeks2450 weeks..
If you average 40 hours for each of those 2450 weeks, you’ll work If you average 40 hours for each of those 2450 weeks, you’ll work 98,000 98,000 hours minimumhours minimum. (A high school dropout works 10 hours a week . (A high school dropout works 10 hours a week more to earn the same pay as a high school graduate.)more to earn the same pay as a high school graduate.)
And that doesn’t include your lunch hour, the time it will take to get to And that doesn’t include your lunch hour, the time it will take to get to and from work, overtime hours and time you will spend keeping up and from work, overtime hours and time you will spend keeping up to date on new skills required for your career.to date on new skills required for your career.
Rules for improving your financial life1) Get a good education.
2) Work long, hard and smart.
3) Learn money management skills.
4) Spend less than you can spend.
5) Save early and often.
6) Invest in common stocks for the long term.
7) Gather information before making decisions.
Industrial RevolutionIndustrial Revolution
OilOil SteelSteel RailroadsRailroads Big BusinessBig Business CorporationsCorporations Monopolies and the Sherman Anti-Trust Act Monopolies and the Sherman Anti-Trust Act
18901890 McKinley Tariff 1890- Protectionism and McKinley Tariff 1890- Protectionism and
Tariff war.Tariff war. Wilson Gorman Tariff- 1894- slight reduction Wilson Gorman Tariff- 1894- slight reduction
in tariff and income tax (ruled in tariff and income tax (ruled unconstitutional)unconstitutional)
Industrial RevolutionIndustrial Revolution
Rockefeller, Carnege, Vanderbilt, and Rockefeller, Carnege, Vanderbilt, and Pullman- “Robber Barons or Captains of Pullman- “Robber Barons or Captains of Industry?”Industry?”
Mass MarketingMass Marketing Unions- Organization, Strikes, Violence, and Unions- Organization, Strikes, Violence, and
Bread and Butter Unionism (better pay, Bread and Butter Unionism (better pay, shorter hours, and better conditions)shorter hours, and better conditions)
Transportation and Communication Transportation and Communication improvements of the late 1800’simprovements of the late 1800’s
Silver v. Gold Issue and the PopulistsSilver v. Gold Issue and the Populists
ProgressivismProgressivism
Square Deal and Theodore RooseveltSquare Deal and Theodore Roosevelt Regulating Big Business- Sherman Anti-Trust Regulating Big Business- Sherman Anti-Trust
and Trust Bustingand Trust Busting 1616thth Amendment - 1913 Amendment - 1913 Taft and the Payne-Aldrich Tariff- supposed to Taft and the Payne-Aldrich Tariff- supposed to
lower tariffs actually raised themlower tariffs actually raised them Wilson’s New FreedomWilson’s New Freedom
Tariff reformTariff reform Banking reform- Federal Reserve SystemBanking reform- Federal Reserve System Anti-Trust Laws- Clayton Anti-Trust ActAnti-Trust Laws- Clayton Anti-Trust Act
What is the Federal Reserve? It manages the countries money system; regulates the banking system; is a bankers bank; and is the government’s bank.
ImperialismImperialism
Why? Economic, Military and IdeologyWhy? Economic, Military and Ideology Manifest DestinyManifest Destiny Hawaii- trade, sugar, Hawaii- trade, sugar, bayonet constitutionbayonet constitution and and
annexationannexation China- trade, Treaty of Wanghia 1844- gave U.S. most China- trade, Treaty of Wanghia 1844- gave U.S. most
favored nation status, Sphere’s of Influence, Open-favored nation status, Sphere’s of Influence, Open-Door Policy and Boxer RebellionDoor Policy and Boxer Rebellion
Japan- trade, Commodore Matthew Perry, and the Japan- trade, Commodore Matthew Perry, and the Treaty of Kanagawa.Treaty of Kanagawa.
Spanish American War- Cuba, Philippines, Guam and Spanish American War- Cuba, Philippines, Guam and Puerto Rico.Puerto Rico.
Panama CanalPanama Canal Taft’s Dollar DiplomacyTaft’s Dollar Diplomacy
World War IWorld War I
Financial ties to the AlliesFinancial ties to the Allies Unrestricted submarine warfareUnrestricted submarine warfare HomefrontHomefront
Mobilizing the economy- industry, food, fuel Mobilizing the economy- industry, food, fuel and suppliesand supplies
Mobilizing workers- National War Labor Mobilizing workers- National War Labor Board, Women, Board, Women,
Paying for the War- Taxes and Liberty Bonds Paying for the War- Taxes and Liberty Bonds (war bonds)(war bonds)
Economic Impact on US and the WorldEconomic Impact on US and the World
Post World War IPost World War I
Labor Strife- difficulties, labor losses and major Labor Strife- difficulties, labor losses and major strikes.strikes.
New Economic EraNew Economic Era Henry Ford, the Assembly line and worker pay.Henry Ford, the Assembly line and worker pay. The effect on industry: competition, productivity, The effect on industry: competition, productivity,
and welfare capitalism.and welfare capitalism. The New Consume: new products, advertising and The New Consume: new products, advertising and
demand, installment paying and credit.demand, installment paying and credit. Weaknesses: many Americans were suffering after Weaknesses: many Americans were suffering after
WWI- farmers, overproduction, low prices, farm WWI- farmers, overproduction, low prices, farm failures, insects, floods, hurricane, etc, brought failures, insects, floods, hurricane, etc, brought economic depression to many parts of the nation.economic depression to many parts of the nation.
Harding and CoolidgeHarding and Coolidge HardingHarding
Cut federal budget and reduced taxes on wealthy (trickle down).Cut federal budget and reduced taxes on wealthy (trickle down). Fordney-McCumber Tariff- high tariff, foreign products went up, Fordney-McCumber Tariff- high tariff, foreign products went up,
American prices went up- hurt farmers and Europeans.American prices went up- hurt farmers and Europeans. Teapot Dome Scandal- Bribes from Oil companies to drill for oil Teapot Dome Scandal- Bribes from Oil companies to drill for oil
in federal oil reserve.in federal oil reserve. CoolidgeCoolidge
““Business of America is business”Business of America is business” Business would help America grow, promote the arts and sciences Business would help America grow, promote the arts and sciences
and fund the charities.and fund the charities. Limited role of government in business.Limited role of government in business. Lowered taxes and reduced the budget.Lowered taxes and reduced the budget. Weakened federal regulations on business.Weakened federal regulations on business.
War Debt- Europe owed the U.S. over $10 billion, but too war War Debt- Europe owed the U.S. over $10 billion, but too war torn and tariffs to high, force Germany to pay more reparations. torn and tariffs to high, force Germany to pay more reparations. U.S. become world’s banker.U.S. become world’s banker.
1920’s1920’s The role of women- work outside the home during WWI. The role of women- work outside the home during WWI.
Economic boom of the 20’s provided jobs for women.Economic boom of the 20’s provided jobs for women.
UrbanizationUrbanization Hard times in agriculture saw people move to cities to get work.Hard times in agriculture saw people move to cities to get work. Rise of the automobileRise of the automobile Increase in eduationIncrease in eduation Industrial growth means rise in earningsIndustrial growth means rise in earnings
Gross Domestic Product- between 1922-1928 grew 30%Gross Domestic Product- between 1922-1928 grew 30% Growth of the automobile industryGrowth of the automobile industry Corporate profits up, unemployment down, welfare capitalism, Corporate profits up, unemployment down, welfare capitalism,
and the ability to purchase new products and servicesand the ability to purchase new products and services Stock Market expansion- Stock Market expansion- False Sense of SecurityFalse Sense of Security
1920’s1920’s
WeaknessesWeaknesses Wealth DistributionWealth Distribution Credit on the Stock Market- buying on marginCredit on the Stock Market- buying on margin Federal Reserve SystemFederal Reserve System
Stock Market CrashStock Market Crash Black Thursday, Black Monday, Black TuesdayBlack Thursday, Black Monday, Black Tuesday GDP dropped almost in 1/2GDP dropped almost in 1/2 Effects of the crash- Individuals, Banks (over Effects of the crash- Individuals, Banks (over
5,000 closed), Business and World Economy.5,000 closed), Business and World Economy.
The Great Depression – 1930’sThe Great Depression – 1930’s Bank FailuresBank Failures Farm FailuresFarm Failures UnemploymentUnemployment HoovervillesHoovervilles Dust BowlDust Bowl HooverHoover
Rugged individualism- to much government dims the spirit of Rugged individualism- to much government dims the spirit of AmericansAmericans
Associative State- partnership between business associations and Associative State- partnership between business associations and the government- Hoover Dam.the government- Hoover Dam.
Voluntary cooperation between business and government.Voluntary cooperation between business and government. Direct Action- loans to banks, insurance companies, encourage Direct Action- loans to banks, insurance companies, encourage
home building and make work projects.home building and make work projects. Smoot-Hawley Tariff- raised cost of imported goods to get Smoot-Hawley Tariff- raised cost of imported goods to get
American consumers to buy cheaper American goods. Europe American consumers to buy cheaper American goods. Europe raised tariffs on American goods and a tariff war began.raised tariffs on American goods and a tariff war began.
FDR and the New DealFDR and the New Deal
Banking Crisis- Banking Crisis- Bank HolidayBank Holiday Emergency Banking Act.Emergency Banking Act. Glass-Steagall Act- FDICGlass-Steagall Act- FDIC
Relief, Recovery and ReformRelief, Recovery and Reform Alphabet soup programsAlphabet soup programs Emergency Relief Appropriations Act and WPA.Emergency Relief Appropriations Act and WPA. Social SecuritySocial Security Wagner Act- National Labor Relations Act, NLRB, CIO, Sit-down Wagner Act- National Labor Relations Act, NLRB, CIO, Sit-down
strikes,strikes, Rural ElectricityRural Electricity Economic Recovery? 1937 drop in stock market- Deficit spending Economic Recovery? 1937 drop in stock market- Deficit spending
and Keynesian Theory. Minimum wage.and Keynesian Theory. Minimum wage. Did the New Deal end the depression?Did the New Deal end the depression?
World War IIWorld War II Hyper Inflation in Germany after WWIIHyper Inflation in Germany after WWII Neutrality Act- 1935Neutrality Act- 1935 Cash and Carry policyCash and Carry policy 50 Warships for 8 British bases.50 Warships for 8 British bases. Lend-Lease ActLend-Lease Act Mobilizing for WarMobilizing for War
SoldiersSoldiers WomenWomen New Military basesNew Military bases Industry and Science- labor and the Manhattan project, retoolingIndustry and Science- labor and the Manhattan project, retooling African Americans- military and workforceAfrican Americans- military and workforce Hispanic AmericansHispanic Americans Food, rationing, and recycling- Office of Price Administration, War Food, rationing, and recycling- Office of Price Administration, War
Production BoardProduction Board Paying for the war- taxes and war bondsPaying for the war- taxes and war bonds
Cold War and the Iron CurtainCold War and the Iron Curtain
Truman Doctrine- aid to countries fighting communism.Truman Doctrine- aid to countries fighting communism. Marshall Plan- European Recovery Program- over $13 Marshall Plan- European Recovery Program- over $13
Billion spent.Billion spent. G.I. BillG.I. Bill Labor Unions after the war and Taft-Hartly Act 1947- Labor Unions after the war and Taft-Hartly Act 1947-
reduce union power, closed shops outlawed and 90 day reduce union power, closed shops outlawed and 90 day cooling off.cooling off.
World Bank- Help poor countries build their economies- World Bank- Help poor countries build their economies- money grants and loans.money grants and loans.
International Monetary fund- encourage economic policies International Monetary fund- encourage economic policies that promoted international trade.that promoted international trade.
GATT (General Agreement on Tariffs and Trade)- reduce GATT (General Agreement on Tariffs and Trade)- reduce trade barriers. trade barriers.
Eisenhower EraEisenhower Era
Space Race- Sputnik, Explorer, NASA and the National Space Race- Sputnik, Explorer, NASA and the National Defense Education Act.Defense Education Act.
Military-Industrial Complex- Our permanent arms industry Military-Industrial Complex- Our permanent arms industry could be a threat to freedom.could be a threat to freedom.
Technological developments- television, transistors and Technological developments- television, transistors and integrated circuit, computers (UNIVAC), vaccinesintegrated circuit, computers (UNIVAC), vaccines
1950’s Boomtime- Levitown, sunbelt, interstate highways.1950’s Boomtime- Levitown, sunbelt, interstate highways. Ike wantedIke wanted
To cut back on the size of government, taxes, budget and To cut back on the size of government, taxes, budget and regulationsregulations
He supported private ownership over government ownership.He supported private ownership over government ownership. Flexible price supports for farmers and a “Soil Bank” plan.Flexible price supports for farmers and a “Soil Bank” plan. New Cabinet position- Dept. of Health, Education and New Cabinet position- Dept. of Health, Education and
WelfareWelfare
JFKJFK
““New Frontier”- the domestic policy and changing the New Frontier”- the domestic policy and changing the nation.nation. Asked Congress to reduce taxes to fight unemployment; Congress Asked Congress to reduce taxes to fight unemployment; Congress
failed to act.failed to act. Asked Congress for $6 billion in federal aid to education; failed in Asked Congress for $6 billion in federal aid to education; failed in
Congress.Congress. Wanted to use Social Security to fund medical care to aged; Congress Wanted to use Social Security to fund medical care to aged; Congress
did not consider it.did not consider it. Got Steel companies and unions to cut back price and wage increases.Got Steel companies and unions to cut back price and wage increases. Wage and Price Guideposts- increase in wages was tied directly into Wage and Price Guideposts- increase in wages was tied directly into
increase in output. Help stop inflation.increase in output. Help stop inflation. Aid to the poor- Area Redevelopment Act 1961- financial aid to Aid to the poor- Area Redevelopment Act 1961- financial aid to
economically stressed areaseconomically stressed areas Raised minimum wage from $1.00 to $1.25 per hour.Raised minimum wage from $1.00 to $1.25 per hour. The Space ProgramThe Space Program
Lyndon B. JohnsonLyndon B. Johnson
Great Society The Job Corps and VISTA War on Poverty- 1962-1968- $12 to $27 billion and
percentage of poor fell from 20% to 12% Tax Reduction Act 1964 Medicare and Medicaid Conservation and Ecology Secondary and Elementary Education Act and Higher
Education Act Vietnam
Costs- $2.5 Billion per month- this hurt the Great Society.
Nixon Key Actions Space- Moon landing Winding down of the
Vietnam War Cambodian Incursian Kent State
Détente Visit to China and Ping
Pong Diplomacy Visit to Russia + S.A.L.T.
New Federalism give states control and
reduce Federal Government- deregulation
Troubled Economy Inflation and StagflationInflation and Stagflation Nixon Promised to balance the Nixon Promised to balance the
Budget ($200 Billion) and produce Budget ($200 Billion) and produce a surplus.a surplus.
Tax Reform Act- 1969 ended the Tax Reform Act- 1969 ended the Johnson income tax surcharge.Johnson income tax surcharge.
Vietnam costs rising.Vietnam costs rising. 1969-1970- Nixon proposed wage-1969-1970- Nixon proposed wage-
price guidelines to slow down price guidelines to slow down prices.prices.
Congress created EPA.Congress created EPA. Arab oil embargo caused oil prices Arab oil embargo caused oil prices
to jump in 1973.to jump in 1973. Baby boomers in job market- glut.Baby boomers in job market- glut.
Troubled Economy Aug. 15, 1971- Nixon announced a 90 price Aug. 15, 1971- Nixon announced a 90 price
freeze after prices went up 14.5% (first freeze after prices went up 14.5% (first mandatory wage-price control in peace mandatory wage-price control in peace time.)time.)
Took the country off the gold standard. Took the country off the gold standard. This would end the gold drain to foreign This would end the gold drain to foreign countries turning U.S. dollars in for U.S. countries turning U.S. dollars in for U.S. gold.gold.
10% surcharge on foreign imports. Trying 10% surcharge on foreign imports. Trying to promote sale of U.S. goods abroad and to promote sale of U.S. goods abroad and discourage Americans from buying foreign discourage Americans from buying foreign products- Japan + W. Germany.products- Japan + W. Germany.
The Economy began to thriveThe Economy began to thrive Inflation fell to 3.5%Inflation fell to 3.5% Unemployment droppedUnemployment dropped
Troubled Economy Winding down the Vietnam War- CostsWinding down the Vietnam War- Costs
Economic CostsEconomic Costs The war cost the United States more than $140 billion.The war cost the United States more than $140 billion.
In Vietnam, the last sustained war the nation fought, the United In Vietnam, the last sustained war the nation fought, the United States spent $111 billion during the eight years of the war, from States spent $111 billion during the eight years of the war, from 1964 to 1972. Adjusted for inflation, that's more than $494 billion, 1964 to 1972. Adjusted for inflation, that's more than $494 billion, an average of $61.8 billion per year, or $5.15 billion per month. (an average of $61.8 billion per year, or $5.15 billion per month. (The The Pentagon is spending nearly $5 billion per month in Iraq and Afghanistan, a pace that Pentagon is spending nearly $5 billion per month in Iraq and Afghanistan, a pace that would bring yearly costs to almost $60 billion)would bring yearly costs to almost $60 billion)
Human Costs:Human Costs: There were 540,000 American troops in Vietnam sent by There were 540,000 American troops in Vietnam sent by
Presidents Kennedy and Johnson, more than 325 men being held Presidents Kennedy and Johnson, more than 325 men being held prisoners of war, and America was sharply divided over our prisoners of war, and America was sharply divided over our purpose and our presence in Vietnam.purpose and our presence in Vietnam.
The war left 58,000 American soldiers dead and more than 300,000 The war left 58,000 American soldiers dead and more than 300,000 wounded. Numerous American soldiers also returned home with wounded. Numerous American soldiers also returned home with crippling and long-lasting psychological wounds.crippling and long-lasting psychological wounds.
Troubled Economy Voyage to the Moon- Apollo 11Voyage to the Moon- Apollo 11
Televised- Hundreds of millions Televised- Hundreds of millions of viewersof viewers
3 Astronauts- Armstrong, Aldrin 3 Astronauts- Armstrong, Aldrin and Collins.and Collins.
Lunar Module- the “Eagle”Lunar Module- the “Eagle” The Eagle has landed on The Eagle has landed on
Tranquility base. July 20, 1969Tranquility base. July 20, 1969 6 and 1/2 hours on the Moon.6 and 1/2 hours on the Moon. Costs- three astronauts killed in a Costs- three astronauts killed in a
fire on earth and between $25-$35 fire on earth and between $25-$35 Billion dollars.Billion dollars.
Benefits- PricelessBenefits- Priceless
President FordPresident Ford
Wanted to cut government spending- had to fight Congress over this.
Budget and Impoundment Act of 1974- stopped the President from impounding or refusing to spend money Congress had voted.
Oil and Inflation
President CarterPresident Carter
Economy Inflation Unemployment
Energy Established the Department of Energy Ease dependence on foreign oil- conservation, new sources
and loosening government regulations Change American Habits Alternative energy and tax breaks
Environment Alaskan National Interests Lands Conservation Act Three Mile Island- nuclear power disaster Love Canal- toxic waste cleanup
President ReaganPresident Reagan Economy
Lower taxes and smaller government (reducing agencies and cutting the federal budget and eliminating budget deficits.)
Strong military- increase in defense spending loosened government regulations
Supply-Side EconomicsSupply-Side Economics Tax cuts and business incentives stimulate investment Investment encourages economic growth This results in and increased supply of goods and services. “VooDoo Economics” cutting taxes and boosting military spending.
Recession and Recovery 1981 and 1982 worst recession since great depression and the deficit
skyrocketed Federal Reserve Board raised interest rates- 1979-1982 Economic growth favored the wealthy. Gramm-Rudman- Hollings Act- The Balanced Budget and Emergency Deficit
Control Act- called for mandatory budget cuts to control inflation.
President George H.W. BushPresident George H.W. Bush Shakey Economy
““Read My Lips, no new taxes”Read My Lips, no new taxes” 1980’s-1990’s- uneven economic growth- Famers did poorly, Older U.S.
industries were hit hard. Reagan’s tax cuts benefited mostly the wealthy. Fed. actively raised and lowered interest rate- to avoid recession and inflation.
Deficits Reagan tax cuts and increased military spending- budget deficits tripled. Rising trade deficit- difference between the value of U.S. exports and imports.
Financial deregulation Reagan’s deregulation lead rise to corporate raiding. Companies raided were restructured, merged, sold off piece by piece,
dissolved – downsized. Savings and Loan Crisis 1990- President Bush broke campaign promise and raised taxes. But that did
not stop the deficit, unemployment or poverty from rising.
President ClintonPresident Clinton Economy
Cut the deficit by having a major increase in taxes. Long period of low unemployment and low interest rates. Larger disposable income- income available for spending or saving. Stock Market was up Republican “Contract with America”- Congressional plan to balance the budget, fight
crime, welfare reform and provide tax cuts. Health-care reform
Health-care costs were rising sharply in 1990’s. Very expensive and lots of major changes to health care system.
Welfare reform Clinton plan limited time people could receive benefits and required to find work with
two years of receiving benefits. International Trade
NAFTA- North American Free Trade Agreement U.S., Canada, and Mexico- free trade zones – no tariffs Would it increase trade or lose jobs. WTO- World Trade Organization replaced GATT as a means of settling trade disputes
and forming rules for Global trade.
President George W. BushPresident George W. Bush Economy
Booming stock market starting to fall Collapse of internet related stocks- dot.coms- Investors gambled billions
on dot.coms, but profits did not appear as planned and prices dropped. Recession was beginning
2001- Tax cuts and new tax codes- would it spur the economy? It did not improve the economy and recession got worse.
2003- Tax cuts- hope to promote economic growth. Cuts on Dividends. Updated Medicare Running up large deficits. Social Security reforms- creation of private accounts to fund retirement. Department of Homeland Security War in Afghanistan, Osama bin Laden, War in Iraq, $$$$$ Health Care Energy and Environment Natural Disasters- Hurricane Katrina, Rita, etc..