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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