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POSC 220 FINAL EXAM
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Exam of 36 pages for the course POSC 220 at POSC 220 (POSC 220 FINAL EXAM)
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POSC 220 FINALEXAM
POSC 220
Evatee 8/31/24 POSC 220
,POSC 220 FINAL EXAM
Economic Policy Answer - Economic policy is a purposeful-goal-oriented course
of action taken by government that concerns the production, distribution and
use of material goods and services to maintain economic growth.
Gross Domestic Product (GDP) Answer - Sum of all goods and services we
produce. Value of labor, goods, services we provide and that tells us a lot about
the economy. Our current GDP is about 1.5%.
Inflation Answer - inflation...inflation has to do with rise of prices and one of
the things that causes inflation is too many dollars chasing too few goods. A lot
of people with money with few goods. Government tries to stabilize prices in
order to control inflation and deflation
-prices are increasing on goods
-republicans focus on inflation (costs of goods) and democrats focus on
unemployment (trying to keep it low)
Monetary Policy Answer - Monetary Policy...decisions made in regards to
money and putting it in/out of economy
- Increasing the amount of money in circulation is presumed to stimulate the
economy. Extra money lowers interest rates, making it easier for citizens to
borrow for investments or purchases and this encourages economic activity.
Reducing the availability of money makes it more difficult to borrow or spend,
this slowing an inflationary economy.
Recession Answer - When you have a combination of very high unemployment
and slow economic growth...a period of temporary economic decline during
which trade and industrial activity are reduced, generally identified by a fall in
GDP in two successive quarters.
,Classical economic theory Answer - Classical economic theory: the economy is
a self-adjusting mechanism. Government should stay out of the economy
because it will fix itself and is cyclical...asserts that markets function best with
minimal government interference
Keynesian economic theory Answer - Keynesian economic theory: calls for
government intervention to control recessions and inflations....government
should step in and infuse money when economy isn't well to create jobs and
when it improves, government should step out
Supply side economics Answer - Supply side economics: government should
act to stimulate production and supply rather than demand and
consumption...stimulating production and supply can improve economy rather
than stimulating consumption...give breaks to big businesses or breaks to
consumers? Republicans believe giving breaks the big businesses can help
economy
-fundamental idea was to increase the supply of both labor and capital so that
economic growth could take place
Monetarist economics Answer - Monetarist economics: believe that economic
stability can be achieved by controlling monetary growth. Way in which you
help the economy by government controlling money supply. When the
economy is bad, pull money out of circulation. Fewer dollars = people can
spend less
- it argues that excessive expansion of the money supply is inherently
inflationary, and that monetary authorities should focus solely on maintaining
price stability.
COMPETING ECONOMIC THEORIES Answer - COMPETING ECONOMIC
THEORIES
, • Classical economic theory: the economy is a self-adjusting mechanism.
Government should stay out of the economy because it will fix itself and is
cyclical
• Keynesian economic theory: calls for government intervention to control
recessions and inflations....government should step in and infuse money when
economy isn't well to create jobs and when it improves, government should
step out
• Supply side economics: government should act to stimulate production and
supply rather than demand and consumption...stimulating production and
supply can improve economy rather than stimulating consumption...give breaks
to big businesses or breaks to consumers? Republicans believe giving breaks
the big businesses can help economy
• Monetarist economics: believe that economic stability can be achieved by
controlling monetary growth. Way in which you help the economy by
government controlling money sup
Social welfare policy Answer - Social welfare policy: Direct or indirect goal
oriented activity by gov to improve the well-being of people who are hurt by
unregulated social and economic forces
5 MAJOR SOCIAL WELFARE LAWS Answer - 5 MAJOR SOCIAL WELFARE LAWS
• Social security act of 1935
o Established a system of old-age benefits for workers, benefits for victims of
industrial accidents, unemployment insurance, aid for dependent mothers and
children, the blind, and the physically handicapped.
o Insurance program
o Assistant program
• Economic opportunity act of 1964
o LBJ administration...attempt to create opportunity for people in rural areas,
job training, college loans with low interest
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