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Public Policy: Nurturing Prosperity  

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1. How do know whether the US is prospering? Five indicators

 

·  A. Economic Wealth: Gross Domestic Product, or GDP
 

 

·  B. Jobs and Unemployment
 

 

·  C. Prices and Inflation
 

 

·  D. Trade
 

 

·  E. Inequality
 

2. Why are Governments important for Free Markets?

   
     - Why are Governments important for Free Markets?

   

     - Why did the Great Recession happen and
       how does it  affect us now?

 

- The ideal of the "free market" is very attractive to Americans in theory -
         

                   Because it promises both freedom and prosperity

 

- Government are indispensable for markets (for example, government protects property rights and contracts)

    in practice, Americans constantly ask government to intervene in markets because:

 

Americans want  

• to be safe from physical harm – so they want a  military and police to keep them  physically safe
  
   

• They want their property rights and contracts to be protected – so they want courts and police
  
   

• protection from the problems that can come with free markets, like fraud and pollution –  so they want government regulation

 

• protection from economic difficulties they cannot control, like old age, unemployment or serious or chronic sickness
  
   

• want public goods, that is, parks, museums, roads, airports, public education that business will not provide satisfactorily

 

• The Submerged State: Americans do not realize how much they need and depend on government.
  
  
   

The Submerged State: Americans do not realize how much they need and depend on government

 

 

The central question: Where to draw the line between politics and markets?

 

 

 

3. Why did the Great Recession happen and how does it  affect us now?

   

   

 

        Housing


        The Great Recession was really bad

 

   

 

What are the consequences?

       The recovery has been very slow

 

 

       

        The consequences for income

 

       

 

        The consequences for budgets

 

 

 

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