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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Using documents 4 - 6, make three claims about the actions President Reagan and his administration undertook in order to foster economic growth. Be sure your claim explains how the action taken would foster economic growth. Support each claim with evidence from at least one document.

Transcribed Image Text:Document The business of our nation goes torward. These United States are contronted with an economic attiction of great proportions. We suffer from the longest and one of the worst sustained iInfiations in our natonal histor.ldle industries have cast workers into unemplayment. Those who do work are denied a fair retum for their labor by a tax system which penalizes suocessful achievement.. In this present crisis, govemment is nat the solution to our problem; govemment is the problem. The solutiors we seek must be equitable, with no one group singled out to pay a higher price.But great as our tax burden is, it has not kept pace with public spending. For decades we have piled deficit upon deticit, mortgaging our future and our chidren's future for the temporary covenience af the present To continue this long trend is to guarantee tremendous social, cultural, poltical, and economic upheavals. Wel, this administration's objective will be a healthy, vigorous, growing economy that provides equal opportunities for all Americans, with no bariers born af bigotry or discrimination. Putting America back to work means putting all Americans back to work.All must share in the productive work of this "new beginning." and all must share in the bounty of a revived economy. .It is time to reawaken this industrial giant, to get government back within its means, and to lighten our punitive tax burden. And these wil be our first priorities, and on these principles there will be no compromise. Source: Fanald Reagan, tranacript of inaugural speech outining economic positions, "First Inaugural Addresa (axcerpts, January 20, 1981 booument 5 .Reagan's economic program took center stage, and manetary policy, which was as impartant but held a lower profile. Within weeks of becoming President, Reagan asked Congress to cut marginal tax rates over the next three years by 30 percent and to trim the budget for the coming year by $41 bilian. He and his team contidently predicted that these actions would stimulate economic productivity. two major components: tax reductions and budget outs, v Ater compromises that slightly lessened the tax cuts and restared some of the propased budget cuts, Congress quickly passed both bils. The heart of Reagan's economic program was now in placn He hadobtained a 25 parcent reduction in taxes over three years. Supposedly, Congress had also made $38 billon in budget auts but these were more than oftset by ather spending increases. The federal budget still was not balanced, however, and Reagan's advisers contermplated other measues to increase revenues. In 1984, the Treasury Dopartment bagan pulling together a proposal that wauld lower corporate and individual tax rates but broaden the federal gavernment's tax base-and enlarge its revenues despite rate reductions-by closing loopholes that allowed individials and corporations to avoid taxes and eliminating deductions that the govemment considered tax shalters. This plan emerged as the essence of Reagan's tax reform proposal. Ronald Reagan took office in 1981 promising to curb the growth of government regulations, especialy those that atfected private industry and businesses. He beleved that a web at regulation was strangling private enterprise in the United States and harming the nation's economy. Despite Reagan's anti-regulatory rhetoric, the administration's success in eliminating and simplifying regulatbns was mixed. His success varied from agency to agency: in some of them, Reagan appointees managed to slow the regulation.

Supply Side Economics
Reduce Federal Income Tases
SS
Eene
TAX
Mure t
One aspect of Reaganomics was to rely on the
theory af supply side oconamias. This theory
relied on sharp tax cuts for businesses &
The second aspect of Reaganomics was to
reduce federal income taxes. Income tax
brackets were changed, and by 1386, the
Investors,, with the goal of increasing the
amount of money oorporations and investors
had to invest. Their new investments wDuld
highest tax brackets (wealthiest Anericans)
want from paying 70% of their income in taxes
to 28%. The idea was that if money was
available to wealthy consumers, they would in
turn spend more maney on goods and services
which would in turn create more jebs, and
stimulate the econcmy.
lead to economia growth, and eventualy more
jobs. Overtime, more economic activity would
produce more tax revenue for the government.
Deregulation
Smaller Federal Govt
accepted
rules noun
set of ex
nrincipl
pre-
Reagan believed that people would prosper if
they were dependent on individual eftort, and nat
tederal ald. Additionally, because af the
Immediate impact af his tax auts, the federal
gavt had less revenue to support pregrams ike
federal welfare programs, medicare payments,
and food stamp programs. To maintain a
President Reagan pushed an agenda that
included heavy deregulation of a few key
industries. He believed that fewer restrictions
on these industries would lead to expansion
and investment in those industries, leadng to
overall improvement of the economy.
balanced budget, he cut federal spanding on
social welfare programs, imiting the role of
federal gov't in people's lives.

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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