Mixed Economy
Economies that have elements of both public and free market types of economies. Crown corporations (govt owned/public) coexist with privately owned businesses
Who proposed the mixed economy?
John Stuart Mill, who saw the abuses of the free market system during the Industrial Revolution, and thought that the government should have an active role in the economy
How did the economy go from welfare capitalism to a welfare state?
This drastic social and economic change was driven by the Great Depression. Classical liberalism was questioned when banks and businesses started to go under, hence why modern liberal economics were implemented
Business cycle
The fluctuations in the economy over several months or years. These fluctuations typically involve periods of rapid economic growth (expansion/boom) and periods of decline (recession/bust)
Demand-Side/Keynesian Economics
Created by the economist John Maynard Keynes, who did not agree with the free market. He thought that the government must intervene and stimulate the economy by encouraging consumers to demand goods & services
Correcting Recessions
1) Lower interest rates
2) Lower personal taxes
3) Increase government spending
These actions increase the amount of money into the economy
Correcting Inflation
1) Raise interest rates
2) Raise personal taxes
3) Lower government spending
These actions reduce the amount of money in the economy
The Great Depression
The massive economic collapse in the 1930’s that started with the stock market crash. It was characterized by high unemployment and reduced consumer spending
Herbert Hoover
President of the U.S during the Great Depression who believed in laissez-faire economics, and was criticized for allowing the Great Depression to worsen, as he was against government intervention
Hooverville
A creation of “shanty-towns” by individuals who were unemployed/homeless as a result of the Great Depression
Richard Bennett
Prime Minister of Canada during the Great Depression who was blamed for the poor economic situation in Canada as a result of the Conservative Party’s stance on government intervention
Bennett Buggys
Vehicles with no engines that were pulled by horses and were the result of the inability of individuals to afford to pay for gas/have a vehicle
New Deal (Franklin D. Roosevelt)
Used government intervention to stimulate the economy after the Great Depression. He implemented programs to provide employment. His interventions reformed the banking industry and regulated the stock market
Emergency Banking Act
This was part of Roosevelt’s New Deal and served as an attempt to stabilize the banking system. He held a four day banking holiday to allow congress more time to correct this problem
Congress’s Correction (after the Great Depression)
Supplied unlimited amounts of currency to reopened banks, created 100% deposit, and gave the government more power to be involved in monetary policy
