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Reagan > Reaganomics > Flashcards

Reaganomics Flashcards

1
Q

What problems did Reagan initially face economically when he came into power? (2)

A
  • Roosevelt’s New Deal had increased federal control and responsibility and letting the budget go far into deficit as was needed
  • Later administrations felt obliged to keep up federal involvement in social welfare and funded it with higher taxes and federal borrowing
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2
Q

What theory was Reagan drawn to?

A

Supply-side theory

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3
Q

Supply-side theory

A
  • Argues that the economy isn’t driven by consumer demand but by keeping up production and encourage saving and investment.
  • Believe restraints on government regulation, high taxes and strong unions should be removed
  • ‘Trickle down theory’
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4
Q

‘Trickle Down Theory’

A
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5
Q

What did Reagan do in the first 3 days of his presidency? (4)

A
  • Sacked many White House staff
  • Put a federal government hiring freeze in place
  • Put a freeze on office furnishings
  • Cut travel expenses by 15%
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6
Q

By cutting taxes and controlling money supply. Reagan was trying to: (7)

A
  • Stop inflation
  • Reduce unemployment
  • Increase personal wealth
  • Increase productivity
  • Encouraged personal saving and investing
  • Cut federal spending
  • Reduce the federal deficit
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7
Q

How many federal programmes’ funding was cut?

A

212 (Most of which were welfare)

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8
Q

In Senate there was a …

A

Republican majority

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9
Q

In House of Representatives there was …

A

Almost a republican majority

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10
Q

How did the Reagan’s failed assassination attempt benefit him?

A
  • Increased his popularity as people felt sympathetic towards him
  • Shown as tough and determined as many doubted his age (69)
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11
Q

What did ERTA (Economy Recovery Tax Act) of 1981 reduce marginal income tax by?

A

23% over 3 years

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12
Q

Tax Indexing (ERTA)

A

Tax indexing is the adjustment of the various rates of taxation in response to inflation and to avoid bracket creep

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13
Q

What did the highest income tax band fall from?

A

70% - 50% - lowest rate since 1925

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14
Q

What did the lowest income tax band fall from?

A

14% - 11%

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15
Q

What happened on the 30 March 1981?

A

Reagan’s Assassination attempt

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16
Q

How did Reagan deregulate on industry and businesses?

A

Cutbacks in staff or regulatory agencies

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17
Q

How much did the cutbacks on industries and businesses average to?

A

29%

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18
Q

in 1982 what was the retirement age changed to?

A

65 to 67

19
Q

What was Reagan’s defence spending in 1981?

A

$157.5 billion

20
Q

What was Reagan’s defence spending in 1989?

A

$303.6 billion

21
Q

Budget deficit when Reagan came into power?

A

$70 billion

22
Q

Budget deficit When Reagan left office?

A

$175 billion

23
Q

What had the increasing deficit forced Congress to pass?

A

Balanced Budget and Emergency Deficits Control Act of 1985 - which enforced spending cuts

24
Q

What did the FRB (Federal Reserve Board) tighten?

A

Money supply

25
Q

What was the problem of tightening the money supply during and increase in unemployment?

A

Led to a sharp rise in interest rates which hurt industries that had to buy supplies on credit or had loans

26
Q

Unemployment rate in 1980:

A

7.1%

27
Q

Unemployment rate in 1983:

A

9.6%

28
Q

Inflation in 1980:

A

13.5%

29
Q

Inflation in 1982:

A

6.2%

30
Q

By 1996 inflation never reached …

A

double figures again and spent most of its time under 5%

31
Q

Part time or temporary work (people employed but not earning at their full capacity):

A

Had risen

32
Q

in 1988, how many individuals were millionaires by assets?

A

1.3 million

33
Q

in 1980, how many individuals were millionaires?

A

574,000

34
Q

How much of the workforce was not included in the unemployment figures in 1988?

A

34.5% as they were considered unemployable, through drug use, or chose not to register for work)

35
Q

What was the average manufacturing productivity growth annually since 1982?

A

4.6%

35
Q

What was the average manufacturing productivity growth annually since 1982?

A

4.6%

36
Q

What was the average manufacturing productivity growth annually in the 1970s?

A

2.7%

37
Q

When did more people begin to save and invest?

A

As the economy came out of the recession

38
Q

What was the deficit in 1980?and what percentage of federal spending would it cost to pay it off?

A

$59 billion - 9%

39
Q

What was the deficit in 1980?and what percentage of federal spending would it cost to pay it off?

A

$208 billion, 14%

40
Q

What had the immense deficit led to?

A

USA became a borrowing nation for the first time ever rather than a lending nation

41
Q

What percentage did defence spending take in 1987?

A

28%

42
Q

During Reagans first term what did America experience?

A

The longest ever period of economic growth in peacetime

Reagan (7 decks)

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