Chapter 16 Economic and Social Welfare

Transcript:Chapter 16 Economic and Social Welfare:
Chapter 16 Economic and Social Welfare Policymaking Jenna Grunwald, Hannah Schaeffer, Rachel Seagren, Brooke Knutson and Hannah Schaeffer 16.1 Economic Policymaking "Sociotropic" voting- assessing overall rate of employment and unemployment more than individual circumstances Social Welfare Policies: Policies that provide benefits, cash or in-kind, to individuals, based on either entitlement or means testing Democrats stress importance of keeping unemployment low- appeal to working class concerned w/employment Republicans prioritize battle against inflation- appeal to voters w/more money to save and invest 16.1 Two major worries Unemployment and inflation Unemployment rate: (Measured by the Bureau of labor Statistics) the proportion of the labor force actively seeking work but unable to find jobs BLS conducts surveys of 60,000 households each month- reports on first Friday Unemployment rate higher for young adults than other groups Underemployment rate: (Measured by BLS) statistic includes (1) people who aren't working and are actively seeking a job, (2) those who would like to work but have given up looking, and (3) those who are working part-time because they can't find full time position 16.1 cont... Inflation: a rise in price of goods and services BLS uses consumer price index (CPI): the change in cost of buying a fixed basket of good and services Inflation rises: 1973- Arab oil-producing nations cut off flow of oil to US to protest American support for Israel during war w/ Egypt and Syria 1979- Iranian revolution disrupted flow of oil from Persian Gulf 1991- Iraq invasion of Kuwait, rose in anticipation of shortages Since then rate below 4%, briefly exceeded 5% in 2008 16.1 Policies for controlling Economy Laissez-faire: the principle that government should not meddle in the economy President Herbert Hoover's strategy during 1929 stock market crash and unemployment, crushed next election by Roosevelt's New Deal programs Since then both parties recognize capitalism must be somewhat regulated by federal government 16.1 Monetary Policy Monetary Policy and the Fed Chairman of Federal Reserve Board most important economist- doesn’t need congressional support, huge impact, deliberates in secret w/public statements as clues to future actions Monetary Policy: government manipulation of supply of money and credit in private hands Monetarism: economic theory holding that the supply of money is the key to a nation’s economic health, with too much cash and credit in circulation producing inflation Monetarist advise rate of growth of money supply should not exceed gross domestic product (GDP) 16.1 cont... Federal Reserve System: