Chapter 17 - Economic Policymaking

Question 1

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

Answer 1

Mixed economy

Question 2

Businesses with vast holdings in many countries, many of which have annual budgets exceeding hat of many foreign governments

Answer 2

Multinational corporations

Question 3

The federal agency created during the New Deal that regulates stock fraud

Answer 3

Securities and Exchange Commission (SEC)

Question 4

The legal minimum hourly wage for large employers

Answer 4

Minimum wage

Question 5

An organization of workers intended to engage in collective bargaining

Answer 5

Labor union

Question 6

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

Answer 6

Collective bargaining

Question 7

As measured by the Bureau of Labor Statistics, the proportion of the labor force actively seeking work but unable to find jobs

Answer 7

Unemployment rate

Question 8

The rise in prices for consumer goods

Answer 8

Inflation

Question 9

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

Answer 9

Consumer price index (CPI)

Question 10

The principle that government should not meddle in the economy

Answer 10

Laissez-faire

Question 11

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

Answer 11

Monetary policy

Question 12

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 produces inflation)

Answer 12

Monetarism

Question 13

The main instrument for making monetary policy in the United States. It was created by Congress in 1913 to regulate the lending practices of banks and thus the money supply

Answer 13

Federal Reserve System

Question 14

The policy that describes the impact of the federal budget- taxes, spending, and borrowing- on the economy

Answer 14

Fiscal policy

Question 15

The theory emphasizing that government spending and deficits can help the economy weather its normal ups and downs. (stimulate the economy when it is lagging)

Answer 15

Keynesian economic theory

Question 16

An economic theory advocated by President Reagan holding that too much income goes to taxes so too little money is available for purchasing, and the solution is to cut taxes and return purchasing power to consumers

Answer 16

Supply-side economics

Question 17

Economic policy of shielding an economy from imports

Answer 17

Protectionism

Question 18

International organization that regulates international trade

Answer 18

World Trade Organization (WTO)

Question 19

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

Answer 19

Antitrust policy

Question 20

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

Answer 20

Food and Drug Administration (FDA)

Question 21

A 1935 law, also known as the Wagner Act, that guarantees workers the right of collective bargaining, and sets down rules to protect unions and organizers

Answer 21

National Labor Relations Act

Question 22

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

Answer 22

Capitalism