1. ReaganomicsReaganomics
What effect does a
changing economy have
on American society?
• America’s Changing
Economy Graphing Activity
• Reaganomics decision

2. America’s Changing
Economy Graphing Activity
Different Types of Industries
Employment by Industry graph
Main sectors of the economy
Employment by Industry in the U.S. graph

3. Different Types of Industries
 Services
 Considered white
collar
 Some jobs require a
high level of formal
education
 Agricultural
 Considered blue
collar
 Create products
based on a farm
 Little formal
education needed
 Manufacturing
 Considered blue collar
 Create products by
hand or with machines
 Little formal education
needed
 Mining
 Considered blue collar
 Remove mineral from
the ground
 Little formal education
needed

4. Write the following statements
in your notes.
 Between 1910 and 2010, these industries
saw a decline
 Between 1910 and 2010, this industry saw
an increase

6. Main sectors of the economy
Manufacturing
 Considered blue
collar
 Create products
by hand or with
machines
 Little formal
education needed
Professional and
Business Services
 Considered white
collar
 Provides services or
transacts business
operations
 Formal education
usually required

7. Write the following statements
in your notes.
 Between 1951 and 2007, the overall trend for
manufacturing employment
 (increase, decrease or stay the same)
 The difference in manufacturing employment
between 1951 and 2007 was
 Between 1951 and 2007, the overall trend for
professional and business employment
 (increase, decrease or stay the same)
 The difference in professional and business
employment between 1951 and 2007?

9. Reaganomics Decision
Directions
1. Read the handout and decide what
you will do in each of the five areas.
2. Fill out handout 2 and decide what you
will do about federal spending.
 If you are cutting the budget, decide
where the money will come from.
1. Discussion on the budget

10. Reduce Federal Spending
 Would you cut the federal budget?
 Which programs would you cut and why?

11. Lower income-tax rates for
individual and businesses
 Would you lower income-tax rates for
individual and businesses?
 How would this help with the economy?

12. Decrease government
regulation of business
 Would you decrease government
regulation of business?
 How would this help with the economy?

13. Fight inflation by keeping
interest rates high
 Would you fight inflation by keeping
interest rates high?
 How would this help with the economy?

14. Balance the federal budget
 Would you balance the federal budget?
 How would this help with the economy?

15. Read the Reaganomics handout
and answer these questions.
 Essential Question: What is the proper role ofEssential Question: What is the proper role of
government in people’s lives?government in people’s lives?
 1. Did the economy under Reagan improve? Use1. Did the economy under Reagan improve? Use
two examples from the text to support your answer.two examples from the text to support your answer.
 2. According to the article, why did Regan believe2. According to the article, why did Regan believe
cutting taxes would improve the economy? Explaincutting taxes would improve the economy? Explain
at least two reasons in your own words.at least two reasons in your own words.
 3. Which action taken by Reagan had the greatest3. Which action taken by Reagan had the greatest
impact on the economy? Use a specific exampleimpact on the economy? Use a specific example
to support your response?to support your response?
 4. Explain why Reagonomics is a good title for this4. Explain why Reagonomics is a good title for this
article. Give two reasons to support your response.article. Give two reasons to support your response.

16. The Conservative
(Reagan) Revolution
 Response to overgrown
government entitlement
programs
 $300 billion annually
 Goals of conservative
movement
 Shrink the size of the
federal government and
reduce spending
 Promote family values
and patriotic ideals
 Stimulate business by
reducing government
regulations and lowering
taxes
 Strengthen national
defense

17. Reagan’s Government
Spending Policies
 Made an attempt to cut but was largely
unsuccessful
 Tried to slow its growth
 Increased defense spending by $28 billion
 Possibly led to end of the Cold War
 Proposed cutting Social Security payments to early
retirees
 After pressure, Reagan dropped the idea
 Formed a commission to study the problem
 Cuts in education, protection, transportation,
and general government
 Saved only $10 billion
 Federal budget rose to almost $500 billion

18. Reagan’s Tax Cuts
 Congress passed and Reagan signed
a law to lower tax rate
 5% in 1982
 10% in 1983
 10% in 1984
 Tax rate for wealthiest Americans dropped
from 74% to 50%
 Also cut taxes on businesses
 May have caused the large economic
expansion of the 1980s
 At the time the longest peacetime expansion in
American history

19. Reduction of Regulations
Some industries benefited
 Oil and banking
Weakened antitrust laws against large
businesses
Positives- decreased regulation reduced costs
and increased investment and expansion
Negatives- fewer regulations meant businesses
could be riskier or unethical
 Banking industry had many savings and loans
companies go bankrupt
 Cost the government over $500 billion

20. Interest Rates
 The percentage that banks charged
borrowers on the unpaid portion of
their loans
 High interest rates prevented inflation
but discouraged investment
 Federal Reserve did not lower them
 President Reagan did not intervene
 1983 economy rebounds and interest rates
fall

21. Balanced Budget
 Impossible when government spending
increases while tax cuts are enacted
 Deficit
 What the government still owes after taxes
are collected
 Grows from $79 billion in 1981 to $113 billion
in 1982