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# Ideology & Economic Policy |
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## Political Ideology and the Marketplace |
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using government policy to further economic development by using taxes, spending programs etc. |
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## Keynessian Economics |
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Deal with economic policy related to gov spending and taxation. |
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Beleif that economy wont operate on 100% cap without government involvement |
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Gov should step in and do demand if it is falling too low |
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## Fiscal Policy |
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economic policy related to gov spending ant taxes |
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## Multiplier effect |
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mechanism where increasing spending causes economic growth greater than the amount of spending |
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## Supply-Side Economics |
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(fiscal conservatives) belif that the gov should leave as much of money supply to the people and let laws of economics deal with the market. laissez-faire market theory |
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## Taxing |
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article 1 of constitution gives congress taxation powers |
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## Sixteenth Amendment |
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allowed congress to tax people's incomes |
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## Internal Revenue Service (IRS) |
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goverment agency that manegess collection process of taxes |
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## Progressive Tax |
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as one gets better so does one's taxes |
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## Flat Tax |
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all citizens should be taxed the same amount |
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## Spending |
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government spends its budget on different things depending on the party. Both parties need to vote on the acutal budget. |
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## Federal Suprlus and Deficit Chart |
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often we have a lot less surplus government spending. especially since the 2008 financial crisis. |
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## Monetary Policy |
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how the goverment manages supply and demend of its currency and the value of the dollar. |
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## Inflation |
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too much dollars in circulation and then ricing prices and devaluation of the dollar occurs |
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## Federal Reserve Board |
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gov agency that manages the monetary policy by buying and selling securities and bonds, as well as the amount of money reqiired at reserves as well as setting interest rates. |
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## Discount Rate |
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the interest rate at which the government loans actual dollars to comerical banks. tends to set the interest rates for consumers as well |
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## Reserve Requirement |
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every bank needs to keep a certain amount of money in their reserves in order to prevent a great depression. effects how much the bank can loan out. |
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## Bonds |
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government IOSs - promise that the US will pay back later with interest. |
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-- note to self: i need to buy a bond |
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## Federal Reserve and the Economy |
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??? |
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## Think as a Political Scientist |
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Study the graphics and answer the questions that follow |
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1. What inferences can be made from the data? |
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that as the economy has declined the discount rate has lowered in order to help boost the economy |
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2. What additional information about the government's economic activity over this period might make this graphic more valuable in understanding |
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showing different historical events relating to the us history, vietnam war, cold war, economic bubbles etc |
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## Differing Views on Monetary Policy Globalization |
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people view money very differently as it is a political discussion. |
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some thing easy-money is good while others look back at history and state that it is a contributing factor to bad events |
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## Trade Balance |
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nation that exports more than it imports |
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## NAFTA (North American Free Trade Agreement) |
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1994 agreement between US, Canada, Mexico. Removed import taxes between in order to make a more competative continent compared to the EU and Europe |
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## Essential Question: What are the differing political ideologies in the government's role in regulating the marketplace, and what impact do those ideologies have? |
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1. Conservative Ideology (Regulating the Marketplace, Fiscal Poilicy, Monetary Policy, Trade) |
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Do not like to regulate the market, government should make the economy handle eveythign itself and that the banks should manage money so make interest rates low |
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2. Liberal Ideology (Regulating the Marketplace, Fiscal Poilicy, Monetary Policy, Trade) |
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regulate and incentivise programs in order to further social progress, taxes should be different for people so that money is fairly used |
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