Ch.16: Government and the Economy Flashcards
a law, rule, statute, or edict that expresses the government’s goals and provides for rewards and punishments to promote those goals
public policy
The four fundamental economic goals of the government regarding public policy include
to promote economic stability
to stimulate economic growth
to promote business development
to protect employees and consumers
Laws aimed to end criminal efforts to control business through such illegal means as extortion and kickbacks
federal racketeering laws
goods or services that are provide by the government because they either are not supplied by the market or are not supplied in sufficient quantities
public goods
The two most important measures if tracking national economic growth include
Gross national product (GNP) & Gross domestic product (GDP)
The market value of the goods and services produced in the economy
GNP
the total value of goods and services produced within a country
GDP
The most fundamental way that government affects investment is by
promoting business, investors, and consumer confidence
FED. DEP: in charge of regulations of financial markets. Requires companies to disclose information about the stocks and bonds they are selling, inform buyers of the investment risk and protect investors from frauds
SEC: Securities and Exchange Commissions
supports basic research across a range of fields in order advance fundamental knowledge that may be broadly useful
National Science Foundation
conducts basis and applied research in biomedicine
National institute of health
played a key role in ensuring an adequate supply of labor through American history, Special priority to workers who have skills that are in demand
Federal immigration
put millions of people to work during the new deal. Bridges, parks, and buildings constructed
Work Progress Administration
A consistent increase in the general level of price
inflation
congressional grants given to states and localities on the condition that expenditures be limited to a problem group specified by the law
categorical grants
was created to offer loans, loan guarantees, and disaster assistance to small businesses
Small Businesses Administration
Nonprofit research and development consortium of major U.S computer microchip manufacturer
Sematech
charged with overseeing union elections and collective bargaining between labor and industry
National Labor Relations Board
The ____ ______ _______ act, which created the minimum wage.
Fair Labor Standards act
raised concern over the unsanitary food processing. thus created the U.S Department of Agriculture to inspect packing plants and the meat they produced
The jungle, Sinclair
_______ ___ ____ _____ helped sparked consumer safety.
Unsafe at Any Speed, (NADER)
Departments that overlook consumer safety include
the consumer product safety commission
the department of transportation
the food and drug administration
followers of the economic theorist of John Maynard Keynes, who argued that the government can stimulate the economy by increasing the public spending or by cutting taxes
Keynesians
an economic system in which the means of production and distribution are privately owned and operated for profit with minimal or no government interference
laissez fair capitalism (ADAM SMITH)
An economic theory that posits reducing the marginal rate of taxation will create a productive economy by promoting levels of work and investments that would otherwise be discouraged by higher taxes. TAXES SHOULD REMAIN LOW AT ALL TIMES TO ENSURE A GROWING ECONOMY.
supply side economy
Consumer groups, environmentalist, businesses, and labor all work to shape the economic policy, Of these groups ____________ & _________ are the most consistent actors that weigh in across the spectrum of policies
organized labor and businesses
Business groups are most united around the goal of
reducing government regulation
efforts to regulate the economy through the manipulation of the supply of money and credit; America’s most powerful institution in this area of monetary policy is the FEDERAL RESERVE BOARD
monetary policy
a system of 12 Federal Reserve banks that facilitates exchanges of cash, checks and credit; regulates member banks; and uses monetary policy to fight inflation and deflation
federal reserve system
the interest rate on loans between banks that the federal reserve board influences by affecting the supply of money available
federal funds rate
methods by which the federal reserve system buys and sells government securities and other investments instruments to help finance government operations and to reduce or increase the total amount of money circulating in the economy
open market operations
insures bank deposits up to 250,000
Federal Deposit Insurance Corporation FDIC
by guaranteeing mortgages, the government can reduce the risk that banks run in making such loans, thus allowing the banks to lower their interest rats and making such loans more affordable to middle and lower income families
Department of Housing and Urban Development
the governments use of taxing monetary and spending powers to manipulate the economy
fiscal policy
tax on imported goods
tariff
taxes that are levied on specific products; such as tobacco and alcohol
excise taxes
Taxation that hits upper income brackets more heavily
progressive taxes
taxation that hits lower income brackets more heavily
regressive taxes (social security)
a policy whose objectives is to tax or spend in such a way as to reduce the disparities of wealth between the lowest and the highest income brackets
redistribution
incentives to individuals and businesses to reduce their tax liability by investing their money in areas the government designates
loophole
established five tax brackets ranging from a 15% on the lowest income bracket to 39.6% on those in the highest income bracket
The tax reform act of 1986
in the executive office of the president is responsible for preparing the president’s budget. includes the spending priorities and estimated cost of the president’s policy proposals
Office of Management and Budget
Congress created its own budget institutions: __________ _______ _______; reliable information concerning the cost and economic impact of the policies it considers, it set up a budget process designed to establish spending priorities and to consider individual expenditures in the light of the entire budget. ANNUAL BUDGET RESOLUTION
Congressional Budget office
amount by which government spending exceeds government revenue in a fiscal year
budget deficit
federal spending that is made up of uncontrollable budget items that cannot be controlled through the regular budget process (interest payments, social security, fed employees, unemployment, medicare)
mandatory spending
budgetary items that are beyond the control of budgetary committees and can be controlled only by substantive legislative action in congress
uncontrollable
federal spending on programs that are controlled through the regular budget process
discretionary spending
a single firm in a market that controls all the goods and services of that market absence of competition
monopoly
government regulation of large businesses that have established monopolies
antitrust policy
designed to control the monopolies practice of the railroads. first national regulatory policy
Interstate commerce Act
a policy or reducing or eliminating regulatory restraints on the conduct of individuals or private institutions
deregulation
government grants of cash or other valuable commodities such as land to a person or organization used to promote activities desired by the governments, reward political support to buy off political opposition
subsidies
the power of government to set conditions on companies seeking to sell goods or services to government agencies
Contracting power
Acts that establish new set of goals and procedures for protecting the environment
NEPA, Clean Air, Clean Water, Safe Drinking Water
Three Basic Environmental Policy
mitigation (reduce greenhouse emissions)
R&D promote alternative technologies
Adapt to warmer climates
