economic policy an overview of chapter 23. pop quiz 23 log on to room 917563. you may use p. 76 to...

Economic Economic PolicyPolicy

Economic Economic PolicyPolicy

An Overview of Chapter 23

An Overview of Chapter 23

Pop Quiz 23

• Log on to room 917563.

• You may use p. 76 to take the quiz.

• Close your Chrome books and put them away.

Comparing TermsMacroeconomics• Deals with broad &

general aspects of an economy, as the  relationship between income & investments of a country as a whole.

• Measures the national economy: GDP, inflation, unemployment, etc.

Microeconomics• Deals with specific

aspects of one part of an economy, like households, businesses, individuals, etc.

• Measures the income, profits, and well-being of a particular group.

Monopolies• What is a monopoly?• Why are monopolies “bad” for

consumers?– Artificially high prices– No substitutes for good or service– No incentive to stop poor service or quality

• Adam Smith believed one of the few roles of government in an economy was to keep competition fair.

Government Intervention

• Sherman Anti-trust Act made monopolies that intentionally hurt competition illegal.

• Clayton Anti-trust Act gave the federal government the power to break up illegal monopolies.

• The Federal Trade Commission has the authority to fine, regulate, and even break up businesses that act like monopolies. They must approve mergers of businesses.

• So do monopolies still exist? YES!

Natural Monopolies

• Exist because seller has a unique product or idea.

• Examples?

Government Monopoly

• Run by or exist by the permission of the federal government.

• Examples?

Geographical Monopolies

• Exist due to the fact that no other competition is in area.

• Examples?

Technological Monopolies

• Exists due to patents and copyrights or because competition cannot replicate idea.

The Business Cycle

Economic Indicators• GDP is the total dollar value of all

FINAL GOODS produced in a country in a year.

• Not affected by inflation (Real GDP)• Inflation can affect GDP (ex. Gas

prices)• CPI (consumer price index)

Economic Indicators• Unemployment is the total # out of

work actively seeking a job– Full employment is around 4%– Highest unemployment was 33% during

the Great Depression

• Unemployment is gauged by the number of people applying for benefits.

• Unemployment has an impact on many other economic indicators.

Controlling the Controlling the EconomyEconomy

Fiscal PolicyControlling taxing and spending by

the government to influence the economy. Affects incomes,

services, benefits & spending. Fiscal policy is controlled by the

President and Congress.

Affecting the Economy

• How does a rise in taxes effect the economy? Explain.

• How does an increase in government spending (such as on programs like building bridges, schools, or roads) effect the economy? Explain.

• Using the above examples, how does the government use fiscal policy to affect the economy?

Types of TaxesIndividual

Corporate

Social Insurance

Excise

Estate/Gift

Miscellaneous

Custom Duties

49%33%

9%

The Current National Debthttp://www.brillig.com/debt_clock/

Who is ultimately responsible for our National Debt?

• Presidents make the budget.• Congress approves the budget.• People demand services, low

taxes.

How the Debt Increases

Public Assistance

• Public Education

• TANF

• WIC

• SSI

• Social Security

• Food Stamps/EBT