Economic Policy

by Jared, Chris, and Andreas

Wal-Mart

● Inflation: Increases the prices of its goods over time

Wal-Mart

● SEC: Makes sure Wal-mart isn’t lying to people, people understand the risk of investing

● Unions: Employees will be part of a labor union that Wal-Mart might have to negotiate with (Collective Bargaining)

Wal-Mart

● Occupational Health and Safety Administration: Forces companies to have safety regulations

● Globalization: Countries rely on each other for goods and services

Economic Ideology

Republicans: Low taxes, less restrictions on businesses (supply-side)

Democrats: Progressive taxes to fund a wide variety of public programs to better the economy, help the needy (keynesian)

● The Bureau of Labor Statistics surveys the population once a month

● % of people without a job and looking for work

Unemployment Rate

Consumer Price Index

The CPI measures the cost of 80000 different goods and services

The Fed

● The FOMC (Federal Open Market Comittee) sets the rates banks can charge each other

● The Fed buys and sells bonds from banks to determine how much money the banks have to lend to people.

The Fed cont’d

● Banks have more $ to loan: cheaper rates● Banks have less $: interest rates go up.

Fiscal Policy

● Fiscal policy is how the president manages federal taxing, borrowing and spending,

● Monetary policy: The work of the fed

Keynesian Economics

● During times of economic downturn, the government can stimulate the economy by deficit spending

● Increased taxes, used for public programs

John Maynard Keynes

Supply-Side Economics

● Stimulate the economy by the consumers spending

● Lower taxes on businesses to raise production, to try and lower prices and control inflation

Controlling the Economy

● The private sector is much larger than the public sector (government)

● Private sector dominates the economy

World Trade Organization

● International organization dealing with the rules of trade between nations

WTO Pros & Cons

● Foreign governments can trade, settle trade disputes

● “optimal use of the world’s resources, sustainable development and environmental protection.”

● Rules are written by and for corporations, lack of public opinion representation

Major Policies

Business: ● Sherman Act of 1890 (first antitrust act)● Accounting Oversight Board

Major Policies

Consumers:● Food and Drug Act of 1906: first consumer

protection policy● FDA: Regulates for safety of products● Consumer Product Safety Commission

Major Policies

Labor:● National Labor Relations Act: Protect the

rights of employees and employers● Unemployment compensation● Minimum wage

The Government and Businesses

The government benefits businesses by:● Patents and copyrights● Department of Commerce helps with exports● Fund Research● Small Business Administration helps with

loans and advertising

Consumer Benefits

FDA: Ensures safety of food and drugs

FTC: Since 1960’s the FTC has taken up consumer protection and lending regulation

Law Provisions

● National Labor Relations Act (1935): Unions have the right to negotiate with management

● Taft-Harley Act (1947): Allows right-to-work laws, prohibits unfair Union practices

Democracy and Econ. Policymaking

● Long-term advice is often contrary to the immediate help voters want

● Leads to a lot of conflict making final decisions

Terms to Know

Capitalism: Production is private and profit-based, non-interference from the governmentMixed Economy: Government is involved heavily in economy. “regulator, consumer, subsidizer, taxer, employer and borrower”

Terms to Know

Multinational Corporation: Huge company that operates and has holdings around the world

Labor Union: Workers organized for collective bargaining

Collective Bargaining: Determine acceptable conditions

Terms to Know

Inflation: Rise in prices for goods and servicesLaissez-Faire:Government is not involved in economyMonetary Policy: Government controlling money supply in private handsFiscal Policy: Describes the impact of federal budget on the economy

... More Terms to Know

Monetarism: Economic theory: money supply is key, needs to be controlled to avoid inflationFed. Reserve System: Seven Board of Governors members with 14-year terms create lending policyAntitrust Policy:Ensures competition, prevents monopolies