ronald reagan 1.5 Flashcards
what effects did Reagan’s economic policies have?
- they stopped inflation. inflation was at 11.3% in 1979 because of Reagan’s policies it decreased to 6.2% in 1982
- tax cuts increased personal wealth as the rich became richer. millionaires increased to 100,000 by 1988
- policies increased productivity. productivity peaked in 1983
- personal savings and investments were promoted however, they were lost by the stock market crash of 1987. the consequences were quicker than the depression
- he wasn’t able to control the federal deficit. the deficit increased under Reagan from $59 billion in 1980 to $208 billion in 1983
- the long term effects of Reagan’s policies were seen under bush who continued Reagans policies and this was unpopular
did Reagan reduce the deficit?
no. in 1980 it was $59 billion and by 1983 it was $208 billion. failure to cut the deficit was caused by Reagan’s desire to cut taxes even when the supply-side theory didn’t work
Reagan’s 4 main economic policies
- cutting the federal deficit
- personal and business tax reductions
- deregulation
- planned control of the money supply (kept inflation low)
did Reagan’s policies stop inflation and unemployment
he was able to tackle inflation by putting pressure on the Federal Reserve Board (FRB) to put tighter restrictions on the money supply. this caused a sharp rise in interest rates which was difficult for companies that would buy supplies on credit (car industry).
at first unemployment increased despite this inflation was being dealt with more effectively. in 1979 inflation was at 11.3% but by 1996 it remained under 5%
in 1979 unemployment was at 7.2% and this figure decreased to 5.5% in 1988. although it decreased people weren’t earning to their full capacity. people that took drugs were not included in unemployment figures which made up 34.5% of the population
did Reagan’s policies increase personal wealth
tax cuts made people richer. the rich richer but the poor did not. 100,000 deca-millionaires in 1988
did Reagan’s policies increase productivity?
productivity was lowest in 1982 to highest in 1983. productivity peaked in 1984
Reagan’s successes and failures with inflation and unemployment
successes:
- Reagan put pressure on the federal reserve board (FRB) to put tight restrictions on the money supply.
This led to inflation rates falling and by 1996 it had never reached double figures again, most of the time it was under 5%
failures:
- however, money supply restriction led to high interest rates and damaged industries which buy supplied on credit e.g. the car industry
- unemployment increased from 7.1% in 1980 to 9.6% in 1983.
- people considered unemployable in 1988 was 34.5%
Reagan’s successes and failures with personal wealth
successes:
- tax cuts allowed the rich to become richer
failures:
- supply-side theory did not work
- democrats made significant changes to the bill
Reagan’s successes and failures with productivity
successes:
- productivity peaked under reagan in 1983
failures:
- the country as a whole is considered unproductive in 1982 as seen on the graph measuring the output per worker
Reagan’s successes and failures with save and invests
successes:
- people saved and invested 1982+
- despite minor depression as a result of the 1987 stock market crash, recovery was quick
failures:
- financial savings as a result of the advisors were small
- due to deregulations banks were taking more risks
Reagan’s successes and failures with deficit
successes:
- cut travel expenses by 15% within the government, showed that the government were prepared to take personal sacrifices for the benefit of the government
failures:
- in 1980 the federal deficit was $59 billion by 1983 it was $208 billion
3 reasons it is important to cut a deficit
- a large federal deficit is bad for the economy as GDP increases
- a large deficit meant America had to borrow money from other countries
- money could be spent more effectively if America weren’t in huge amount of debt. cuts made to welfare programmes were damaging
what is big government
excessively interventionist and intruding. the opposite is laissez faire. introduced by Roosevelt, previous presidents hadn’t changed it
is reducing big government beneficial
yes:
- led to the boom in the 1920s
- less federal interference into people’s state and country affairs
- less intervention in world trade and financial affairs
no:
- overlooks minorities who need support
- increases divide across America, different minimum wages (long term effects of deregulation)
- less funding for federal and state projects
- less regulation of business that might encourage unchecked expansion
- unchecked corporate financial lending
- less social welfare for the needy
how was big government reduced
- reduced federal regulations
- deregulated the oil business
- creates a federal strike force which combatted fraud and economic waste
- replaced federal agencies with private sector ones
- introduced volunteers to do federal jobs
