Chapter 13 Flashcards
fiscal policy
government policy that attempts to manage the economy by controlling taxing and spending, which affect inflation through lower taxes and less government spending, and unemployment through more government spending.
monetary policy
government policy that attempts to manage the economy by controlling the amount of money in circulation.
inflation
a rise in the general price level (and decrease in dollar value) owing to an increase in the volume of money and credit in relation to available goods.
unemployment
the number of Americans who are out of work but actively looking for a job. It does not include those who have given up.
income inequality
the amount of after-tax income that the richest individuals control when compared to the amount the lowest control; measured by the growth in the gap between the two.
GDP
Gross Domestic Product- the value of all goods and services produced by an economy during a specific period of time. (like a year)
tariff
tax levied on imports to help protect a nation’s industry from foreign competition. Also used to raise revenue.
Progressive Tax
tax graduated so that people with higher incomes pay a larger fraction of their income than people with lower incomes.
Regressive Tax
Tax whereby people with lower incomes pay a higher fraction of their income than people with higher income. (Collects same percentage on all individuals regardless of income.)
OMB
Office of Management and Budget- presidential staff agency that serves as clearinghouse for budgetary requests and management improvements for government agencies. (executive branch)
CBO
Congressional Budget Office- An agency of Congress that analyzes presidential budget recommendations and estimates the costs of proposed legislation. (legislative branch)
Federal Reserve System
System created by Congress in 1913 to establish banking practices and regulate currency in circulation and the amount of credit available. Consists of 12 regional banks.
Federal Funds Rate
The amount of interest banks charge for loans to each other.
Laissez-faire economics
A theory that opposed governmental interference in economic affairs beyond what is necessary to protect life and property. (Rep)
Keynesian economics
Based on principles of John Maynard Keynes stating that the gov spending should increase during business slumps and curbed during booms. (Dem)
protectionism
a policy of erecting trade barriers to protect domestic industry
trade deficit
imports exceeds the exports
GATT
General Agreement on Tariffs and Trade- An international trade agreement that seeks to lower the barriers to free trade.
WTO
World Trade Organization- International organization with more than 130 members that seeks to encourage fair trade by setting rules for fair competition.
NAFTA
North American Free Trade Agreement- An agreement signed by US, Canada, and mexico in 1992 to form the largest free trade zone in the world.
environmental impact statement
A statement required by federal law from all agencies for any project using federal funds to assess the potential effect of new construction or development on the environment.
compliance costs
costs of meeting regulatory reporting requirements. (like building a clean and safe power plant)
deregulation
policy promoting cutbacks in the amount of federal regulation in specific areas of economic activity.
entitlements
programs that provide benefits to all eligible citizens (like unemployment benefits or disaster relief)
means-tested entitlements
Programs like medicade and welfare that applicants have to meet requirements based on need.
social safety net
the programs that the federal gov provides to protect against economic and social misfortune.
social insurance
programs in which elgibility is based on prior contributions to the gov, usually in form of payroll taxes.
Medicare
national health insurance for elderly and disabled
Medicaid
federal program that provides medical benefits for low-income people.
