1. Economic Policies of the 1980s
Reaganomics
Economic Policies of the 1980s

2. Issues at the Time Inflation Unemployment Stagflation Oil Crisis
Iranian Revolution
Ronald Reagan (1980)

3. AD/AS Stagflation

6. Reaganomics Four Pillars Reduce Government Spending
Reduce Tax Rates on Capital & Labor
Reduce Government Regulation
Control the Money Supply to End Inflation
Reduce government Spending
Reduce Marginal Tax Rates
Control $ supply to reduce inflation
Reduce govt. Regulation of Economy

7. Why & What Campaign Promises Reduce Income Taxes: Deficit Spending:
Lower Taxes
Smaller Government
Reduce Income Taxes:
Top Down Cuts
Benefited the Wealthiest Most
Deficit Spending:
8 straight years of deficit spending

8. The Economy Grows
Income Taxes dropped from 70% to 28% in 7 years ( )
Unemployment reached 10.7% in 1982, but lowered as the economy improved
Inflation decreased during the 1980s
Jobs were created as the economy continued to grow

9. Trickle Down Economics
Massive tax cuts for the top tax bracket
Drastic increase in defense spending (“Window of Vulnerability” & Star Wars)
In order to function, someone needed to spend (either the wealthy or the government)
Vice President George Bush called it “voodoo economics”

10. Effects Wealthiest Americans became wealthier
8 years of Deficit Spending
Reduced Tax Revenue
Budget Deficit
Trade Deficit (enter China)
National Debt tripled during Reagan’s 8 years (from 1 to 3 trillion dollars)
No reduction in size of government (afraid to cut Social Security & Medicare)

11. Reagan’s Achievements
Improved Economy
Lowered Unemployment
Lowered Inflation
Interest Rates Decreased
Average Household Income rose by $4000 per year