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American Government > Ch. 17 Economic Policy > Flashcards

Ch. 17 Economic Policy Flashcards

1
Q

Goals of economic policy

A

to foster trade and commerce and increase prosperity for as many of the nation’s citizens as possible.

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2
Q

Democracy in America

A

book by Tocqueville in which he remarked on the egalitarian nature of the American people, who by their qualities of individualism, hard work, money-making, and capitalist spirit were able to avoid the pitfalls of the Old World aristocratic system.

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3
Q

The American Way/ American System

A

the economic policy characterized by high tariffs, a national bank and stable currency, and internal improvements.

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4
Q

boom and bust

A

period of rapid economic growth and low rates of unemployment followed by a period of rapid economic contraction and high rates of unemployment.

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5
Q

business cycles

A

series of natural fluctuations of business expansion and contractions; can be measured by changes in the GDP.

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6
Q

robber barons

A

term of contempt for the late 19th century and early 20th century industrialists who used exploitative, unethical, and sometimes illegal mean to amass great wealth and power.

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7
Q

monopoly

A

a single business that controls all of the goods and services in a market without any competition.

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8
Q

Interstate Commerce Act (1887)

A

prohibited monopolistic behavior in the railroad industry.

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9
Q

Sherman Anti-Trust Act of 1890

A

prohibited monopolies, trusts, and restraint of free trade in all industries.

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10
Q

Progressive Era

A

1890s-1920s was marked by an attempt to reform business, political and social ills.

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11
Q

laissez-faire economics

A

a hands-off approach to government interference in the economy.

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12
Q

16th Amendment

A

authorized a national income tax

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13
Q

19th Amendment

A

granted women the right to vote

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14
Q

state interventionist mixed economy

A

economy in which the government attempts to influence the economy in a number of areas from employment to inflation and everything in between.

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15
Q

bank run/ bank panic

A

mass withdrawals of funds by panicked bank customers

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16
Q

bank holiday

A

the day following the inauguration of FDR in which all the nation’s banks were closed to stop the collapse of the banking system.

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17
Q

Emergency Banking Act (1933)

A

the federal government guaranteed to insure bank deposits and keep unhealthy banks from reopening.

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18
Q

Banking Act of 1933 (Glass-Steagull Act)

A

separated investment and commercial banking and created the FDIC

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19
Q

Federal Deposit Insurance Corporation (FDIC)

A

guarantees bank deposits against bank failure.

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20
Q

leveraging and margin

A

when an investor borrows money to purchase more stock than he could afford to buy using only his personal funds.

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21
Q

margin calls

A

situation in which the broker exchange requires an investor to put down more collateral or sell the stock.

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22
Q

Securities Act of 1933

A

bill containing several investment industry reforms including limits on margin buying and requirements that investors be informed about investment risks.

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23
Q

Securities and Exchange Commission (SEC)

A

agency created to enforce securities laws.

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24
Q

Dust Bowl

A

period of dust storms that decimated agriculture on the prairies of North America due to drought and imprudent farming practices.

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25
Q

Department of Agriculture

A

federal institution that provided assistance to farmers and played a pivotal role in agricultural reform and conservation during the Great Depression.

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26
Q

Soil Conservation Corps

A

agency created to reclaim the lands ravaged by the Dust Bowl

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27
Q

Civilian Conservation Corps

A

agency created to provide windbreaks and hold the earth in place.

28
Q

Agricultural Adjustment Act of 1933 and Second Agricultural Act of 1938 (AAA)

A

legislation designed to help stabilize commodity prices to farmers in exchange for a limit on the crops that they planted and the livestock that they raised.

29
Q

economic regulations

A

government regulations of business practices

30
Q

social regulations

A

government regulations that protect consumers and the general public in areas like health, the environment, and safety

31
Q

deregulation

A

the reduction or elimination of government regulations in favor of markets and natural factors

32
Q

free market economy

A

an economy where prices for goods and services are based on supply and demand and in which there is little or no government intervention.

33
Q

Gramm-Leach-Bliley Act (1999)

A

repealed the Glass-Steagull Act and deregulated the financial industry

34
Q

global warming

A

increase in average global temperature due to increasing carbon in the atmosphere from the burning of fossil fuels.

35
Q

laissez-faire capitalists

A

economists who believe in the “hands off” economy that stresses competition and a free market

36
Q

An Inquiry into the Nature and Causes of the Wealth of Nations

A

written by Adam Smith in which he championed laissez-faire capitalism

37
Q

Keynesians

A

those who favor the economic theories of John Maynard Keynes, who believed that government spending could stimulate the economy

38
Q

Monetarists

A

those who favor the economic theory of Milton Friedman, who believed government interference should be limited to manipulating the monetary supply to control inflation

39
Q

supply-side economics

A

an economic theory that asserts that there is an optimum tax rate at which work and investment will be maximized.

40
Q

fiscal policy

A

taxing and spending by the government as an economic tool.

41
Q

progressive taxation

A

a tax system in which the level of taxation increases with the wealth of an individual or ability to pay.

42
Q

regressive taxation

A

a tax system in which the level of taxation decreases with the wealth of the individual or ability to pay.

43
Q

flat tax

A

a tax system in which the level of taxation is the same for everyone with the wealth of the individual or ability to pay.

44
Q

redistribution of wealth

A

government taxing and spending that reduces the disparities between the rich and poor in society.

45
Q

Office of Management and Budget (OMB)

A

the executive office that prepares the president’s budget and gives the executive branch advice, research, and forecasting about the economy and other policy issues pertaining to the federal budget.

46
Q

Congressional Budget and Impoundment Control Act of 1974

A

sets the limits on the presidential practice of impoundment

47
Q

Congressional Budget Office (CBO)

A

non-partisan agency whose purpose is to provide Congress with an accurate estimate of revenues and expenditures for the upcoming year so that Congress can plan for the annual budget.

48
Q

president’s budget request

A

request presented to Congress on the first Monday in February that details the amounts to be spent and collected by the federal government and the predicted deficit or surplus.

49
Q

mandatory spending

A

government spending on things that cannot be controlled by the budget process.

50
Q

discretionary spending

A

government spending on things that can be controlled by the regular budget process.

51
Q

Congressional budget resolution

A

a broad guide to how much money will be spent and how much will be allocated to 20 spending categories

52
Q

budget functions

A

20 spending categories used by Congress to fashion the Congressional budget resolution

53
Q

deficit

A

a revenue shortfall; not enough revenue to cover spending

54
Q

surplus

A

a revenue excess; more than enough to cover spending

55
Q

budget “point of order”

A

parliamentary mechanism that allows any single member of the House or Senate to block a piece of legislation if it oversteps spending allocations or cuts taxes below the level set by the budget resolution.

56
Q

budget reconciliation

A

congressional procedure that limits consideration of the budget bill to 20 hours.

57
Q

“pay-as-you-go” or “PAYGO” rule

A

congressional rule that states that the reconciliation process cannot add to the deficit by reducing taxes or increasing spending

58
Q

monetary policy

A

government regulation of national money supply and interest rates

59
Q

Federal Reserve Act of 1913

A

act that created the Federal Reserve System

60
Q

Federal Reserve System

A

manipulates transactions between member banks and monetary policy to affect the economy.

61
Q

Federal Open Market Committee (FOMC)

A

body in charge of open market operations

62
Q

open market operations

A

purchase and sale of government securities on the open market by a central bank

63
Q

Federal Reserve Board of Governors

A

7 members who oversee the Federal Reserve Banks; appointed by potus and serve 14 year over-lapping terms.

64
Q

reserve requirements

A

the percentage of a bank’s deposits that must be held in reserve to cover loans

65
Q

discount rate

A

the interest rate that the Federal Reserve charges member banks when they borrow money

American Government (2 decks)

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