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Do Now:

Do Now: . Do Now Question: Imagine you are a government official in Germany in 1930. What policies would you put in place to improve the economic state of your country? . Objective : Compare and Contrast the theories of 1930s economic philosophers Language Objective :

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Do Now:

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  1. Do Now: • Do Now Question: • Imagine you are a government official in Germany in 1930. What policies would you put in place to improve the economic state of your country? • Objective: • Compare and Contrast the theories of 1930s economic philosophers • Language Objective: • Compare/contrast events

  2. Review Question • What economic problems faced the world after the 1929 stock market crash and the start of the Great Depression?

  3. Basic Economics- Things Taken • Income: money given in exchange for work • Example: $20 for babysitting • Goods and Services: things you buy or things done for you • Example: going to the movies(service), buying popcorn (goods)

  4. Basic Economics-Things Given • Labor: the work the people do for money • Example: babysitting • Payments: money given in return for goods and services • Example: $20 for a T-Shirt • Taxes: money given to the government in exchange for services • Example: roads, schools, etc

  5. Basic Economics • Supply: How much of something there is • Only 15 copies of “Batman #1” in the world • Demand: How much people want that thing • Many people want “Batman #1” • When Supply > Demand= Price is low • When Demand > Supply = Price is high

  6. Basic Economics $ $ $

  7. Households are receiving income from Business and Government. Households are able to buy Goods and Services and Pay Taxes In a Good Economy Businesses are receiving enough Payments from Households and the government. Businesses are able to hire more workers and provide them with Income $ $ Governments are receiving enough Taxes from Households and Businesses. Government is able to hire workers, and provide services $

  8. People have no job, so they are receiving no Income. Households cannot buy Goods and Services and cannot pay taxes. In A Bad Economy Businesses are receiving not getting money from Households Businesses cannot hire workers and has to fire workers it has, ending Income to Households $ $ Governments are receiving not receiving enough Taxes from Households and Businesses. Government cannot hire workers or provide services. $

  9. A Laissez Faire Economy • NO GOVERNMENT INVOLVEMENT!!!! • BUSINESSES ARE THE ONLY PROVIDERS OF GOODS AND SERVICES!!!!

  10. The Great Depression • Businesses lose money after the Stock Market Crash • Businesses don’t have money to hire workers • Workers lose their job. • Workers don’t have money to buy goods from Businesses • Businesses are not making money, so they fire more workers

  11. How to Solve the Problem • European and United States Economies were Laissez-Faire, the government had traditionally not interfered that much • So how could they help their people and fix their economies?

  12. John Maynard Keynes British Economist Developed: Keynesian Economics

  13. Keynesian Economics- Bad Economy • When the economy is bad, the government should spend lots of money to help businesses recover and give people jobs $ $

  14. Keynesian Economics- Good Economy • When the economy is good, government should spend less money and tax people more to save money for the next bad economy $ $

  15. The Austrian School • Most similar to “laissez faire” capitalism • The government should have as little role as possible • When problems hit, the “invisible hand” of the market will correct the economy • The Invisible Hand: the natural forces of the economy

  16. The Austrian School-Bad Economy Government should stay out of it! Eventually the demand for goods will rise and the economy will improve

  17. The Austrian School-Good Economy Government should stay out of it! Eventually the demand for goods will rise and the economy will improve

  18. Milton Friedman • Critical of Keynes • Government should have as little role as possible in bad economic times • During bad times, governments should institute “Austerity” • Austerity: • Getting rid of government services and jobs, and lowering taxes

  19. Milton Friedman- Bad Economy • Decrease taxes so people have more money to spend • Eliminate government services and jobs so the government doesn’t go into debt ¢ ¢ $

  20. Milton Friedman-Good Economy • Keep taxes and services perfectly balanced for a balanced budget • If you spend $1.4 billion, collect $1.4 billion in taxes • But the government should limit tax collection, and therefore limit services $ $ $ $

  21. Closure Question • Having learned what you learned: • Re-imagine you are the Prime Minister of Germany in 1930. Whose policy do you follow? Why?

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