In this short paper (4-6 pages) the student will examine the evolution of Fiscal Policy in the United States since the Great Depression. This paper will flow like a timeline that identifies major figures, events and policies that shaped the ideological approach to government intervention since the 1930s.
Some pointers that MUST be included (this is not exhaustive)
- The neo-classical self-correction argument
- The Panic of 1873
- The Panic of 1893
- The Panic of 1907
- The Great Depression
- Keynesian Theory
- Sticky Wages
- Sticky Prices
- The Multiplier
- The Aggregate Expenditures Model
- Liquidity Trap
- Paradox of Thrift
- The Great Recession
- Modern Monetary Theory
- The economic and political malaise of the 1970s which led to the rise of Reagan
- The 1980 election and the rise of Reagan
Rubric
The Rise of Keynesian Theory- For this criteria, students will discuss how fiscal policy prior to the
Great Depression was consistent with the neo-classical long run “self correction” model and how
Keynes changed the view of the role of government in ending recessions with his “in the long we are all dead” statement. His concepts of sticky wages, prices, the liquidity trap, paradox of thrift, AE model and the multiplier should be
discussed in this section.
The Reagan Revolution and Rise of Deficit Spending- For this criteria, the student will discuss how the economic deterioration that ultimately manifested in the 1970s led to the election of Ronald Reagan
in 1980 and the ushering in of a period of deregulation and increased government spending. The
economic malaise of the 1970s is examined along with the political loss of faith in the presidency.
Policy goals of Reagan (and subsequent presidents) are examined with a particular emphasis on
de-regulation and opening free markets internationally. The rising national debt during this period is discussed.