Budget and the Economy

Question 1

Budget:

Answer 1

a policy document allocating burdens (taxes) and benefits (expenditures).

Question 2

Deficit:

Answer 2

an excess of federal expenditures over federal revenues

Question 3

Expenditures:

Answer 3

government spending of revenues; major areas of federal spending are social services and national defense

Question 4

Revenues:

Answer 4

the financial resources of the government. The individual income tax and social security tax are two major sources of the federal government’s revenue

Question 5

Three major sources of federal revenues are

Answer 5

personal and corporate income tax
social insurance taxes
borrowing

Question 6

Income tax:

Answer 6

shares of individual wages and corporate revenues collected by the government; 16th amendment

Question 7

Federal debt:

Answer 7

all the money borrowed by the federal government over the years and still outstanding; more than 9 trillion today

Question 8

Most of the government’s income comes from

Answer 8

taxes

Question 9

Tax expenditures:

Answer 9

Tax expenditures: revenue losses that result from special exemptions, exclusions, or deductions on federal tax law

Question 10

ex of tax deductions

Answer 10

charitable donations, mortgage deductions

Question 11

Two conditions associated with government growth in America are the rise of the

Answer 11

national security state and the rise of the social service state.

Question 12

Social Security Act:

Answer 12

a 1935 law passed during the Great DEpression that was intended to provide a minimal level of sustenance to older Americans and thus save them from poverty

Question 13

Medicare:

Answer 13

a program added to the Social Security system in 1965 that provides hospitalization insurance for the elderly and permits older Americans to purchase inexpensive coverage for doctor fees and other health expenses

Question 14

Incrementalism:

Answer 14

a description of the budget process where the best predictor of this year’s budget is last year’s budget plus a little bit more

Question 15

Uncontrollable expenditures:

Answer 15

expenditures that are determined by how many eligible beneficiaries there are for a program or by previous obligations of the government

Question 16

Entitlements:

Answer 16

policies for which Congress has obligated itself to pay X level of benefits to Y number of recipients

Question 17

House Ways and Means Committee + Senate Judiciary Committee:

Answer 17

write the tax codes; subject to approval of Congress as a whole

Question 18

CBO

Answer 18

Advises congress on the probable consequences of its decisions, forecasts revenues, and is a counterweight to the President’s OMB

Question 19

Congressional Budget and Impoundment Control Act of 1974:

Answer 19

an act designed to reform the congressional budgetary process. Its supporters hoped that it would also make Congress less dependent on the president’s budget and better able to set and meet its own budgetary goals.

Question 20

Budget resolution:

Answer 20

a resolution binding Congress to a total expenditure level, supposedly the bottom line of all federal spending for all programs

Question 21

Budget reconciliation:

Answer 21

a congressional process through which program authorizations are revised to achieve required savings

Question 22

Authorization bill:

Answer 22

an act of Congress that establishes, continues, or changes a discretionary government program or an entitlement. It specifies program goals and maximum expenditures for discretionary programs.

Question 23

Appropriation bill:

Answer 23

an act of Congress that actually funds programs within limits established by authorization bills. Usually cover one year

Question 24

Continuing resolutions:

Answer 24

when congress cannot reach agreement and pass appropriation bills, these resolutions allow agencies to spend at the level of the previous year

Question 25

Capitalism:

Answer 25

an economic system in which individuals and corporations, not the government, own the means of production and seek profits

Question 26

Mixed economy:

Answer 26

an economic system in which the government is deeply involved in economic decisions through its role as regulator, consumer, subsidizer, taxer, employer, and borrower

Question 27

Multinational corporation:

Answer 27

business with vast holdings in many countries, some of which have annual budgets exceeding that of many foreign governments

Question 28

Securities and Exchange Commission:

Answer 28

a federal agency created during the New deal that regulates the stock market

Question 29

Minimum wage:

Answer 29

The legal minimum hourly wage for large employers

Question 30

Labor union:

Answer 30

an organization of workers intended to engage in collective bargaining

Question 31

Collective bargaining:

Answer 31

negotiations between representatives of labor unions and management to determine pay and acceptable working conditions

Question 32

Unemployment rate:

Answer 32

proportion of labor force actively seeking work but unable to find jobs

Question 33

Inflation:

Answer 33

the rise in prices for consumer goods

Question 34

Consumer price index

Answer 34

: the key measure of inflation that relates the rise in prices over time

Question 35

Laissez-faire

Answer 35

: the principle that the government should not meddle in the economy

Question 36

Monetary policy:

Answer 36

manipulation of the supply of money in private hands by which the government can control the economy

Question 37

Monetarism:

Answer 37

an economic theory holding that the supply of money is the key to a nation’s economic health; too much cash and credit in circulation causes inflation

Question 38

Federal Reserve System:

Answer 38

the main instrument for making monetary policy in the US; regulates the lending practices of banks and thus the money supply

Question 39

Fiscal policy:

Answer 39

the policy that describes the impact of the federal budget - taxes, spending, and borrowing - on the economy; almost entirely determined by Congress and the President, who are the budget makers

Question 40

Keynesian economic theory:

Answer 40

theory emphasizing that government spending and deficits can help the economy weather its normal ups and downs; proponents of this theory advocate using the power of government to stimulate the economy when it is lagging

Question 41

Supply side economics:

Answer 41

an economic theory holding that too much income goes to taxes so too little money is available for purchasing and that the solution is to cut taxes and return purchasing power to the consumers

Question 42

Protectionism:

Answer 42

economic policy of shielding an economy from imports; usually involves tariffs

Question 43

World Trade Organization:

Answer 43

International organization that regulates international trade

Question 44

Antitrust policy:

Answer 44

a policy designed to ensure competition and prevent monopoly, which is the control of a market by one company

Question 45

Food and Drug Administration:

Answer 45

the federal agency formed in 1913 and assigned the task of approving all food products and drugs sold in the US

Question 46

National Labor Relations Act (Wagner Act):

Answer 46

guarantees workers the right of collective bargaining, sets down rules to product unions and organizers and created the National Labor Relations Board