Chapter 17: Economics Flashcards
The government should create the level of demand
Keynesian Economics
Assumes that the health of the economy depends on what is spent/saved by the people
Keynesian Economics
According to Keynesian Economics, if the demand is too low, the government should do what?
Pump money into the economy (deficit spending)
According to Keynesian Economics, if the demand is too high, the government should do what?
Take money out of the economy by increasing taxes
The free market is too undependable to ensure economic activity
Planning
Government should plan parts of a country’s economic activity
Planning
Wage-price controls and industrial policy (gov. directs all industrial investments)
Planning
The price of all things is determined by the supply and demand
Trickle Down Economics/ Supply- Side Economics
Inflation is caused by not enough supply of goods, making goods cost more
Trickle Down Economics/ Supply- Side Economics
Increasing the supply of goods reduced prices (supply side)
Trickle Down Economics/ Supply- Side Economics
There is a need for less government interference in the market and lower taxes
Trickle Down Economics/ Supply- Side Economics
The rich get richer and the greater wealth trickles down to he middle and poor class
Trickle Down Economics
Combination of monetarism, supply-side tax cuts, and domestic budgeting being cutt
Reaganomics
Goals are not entirely consistent
Reaganomics
Reduction in the size of the federal government
Reaganomics
Stimulates economic growth and increases military strength
Reaganomics
What is one main effect of Reaganomics
Stimulated Economy
Unemployment decreases, business activity increase
Stimulated Economy
Created by Milton Friedman
Monetarism
Asserts that inflation occurs when there is too much money chasing too few goods
Monetarism
Effective control of the economy occurs with the manipulation of the money supply
Monetarism
Interest rates fluctuate depending on inflation (FDR does this)
Monetarism
What are the 5 budgeting theories
Monetarism
Keynesian Economics
Planning
Trickle-Down/ Supply-Side
Reganonomics
What is an example of Monetarism
The Federal Reserve System
