Final

Question 1

Monetary Policy

Answer 1

Economic policy in which government regulates the economy by manipulating interest rates to control the money supply.

Question 2

Fiscal Policy

Answer 2

Economic policy in which government regulates the economy through its powers to tax and spend.

Question 3

Deregulation

Answer 3

Elimination of regulations in order to improve economic efficiency.

Question 4

Supply and Demand

Answer 4

Amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.

As supply increases, price decreases. As demand increases, price increases. Vise versa

Question 5

GDP

Answer 5

Gross Domestic Product, total market value of all goods and services produced by everyone in a particular country during a given year.

Question 6

Business Cycle

Answer 6

Peaks and valleys of the economy between boom and bust.

Question 7

Recession

Answer 7

Decline in GDP for two consecutive quarters.

Question 8

Federal Reserve

Answer 8

System that is independent commission that controls the money supply through a system of twelve federal banks. Central bank in the US.

Question 9

Supply Side Economics

Answer 9

President Ronald Reagan’s economic plan, by which tax cuts would ultimately generate more, not less, government revenues by allowing for increased investments and productivity.

Question 10

Progressive and Regressive Taxes

Answer 10

Progressive Taxes: taxes whose rates increase with income

Regressive Taxes: taxes that require poor people to pay a higher proportion of their income than do the well off

Question 11

Trade Deficit

Answer 11

Difference between the value of the goods a country imports and what it exports.

Question 12

Difference Between American and Western Social Policy

Answer 12

America spends less on social policy/government provided welfare programs. 19% of US GDP is directed towards social expenditure. In some ways we spend a lot, others we spend very little. When we are spending a lot, it is not very efficient.

Question 13

General Qualities of American Environmental Policy

Answer 13

Basis of environmental policy in the US is regulatory policy. Direct subsidies for fossil fuels are very low. Challenges that will pressure environmental regulatory regime in the future: Environmental justice (requiring that all Americans be afforded same protection from environmental hazards), regulatory takings (ability of the government to prevent property owners from using their land), and fissile fuel (concern for environmental damage and reliance on foreign sources of energy).

Environmental policy is a regulatory policy that often leads to debates on balancing the protection of the environment with the protection of business. Today’s major environmental debates revolve around issues of shale-gas extraction, nuclear energy, and the key stone XL pipeline.

Question 14

Social Security

Answer 14

Social insurance program under individuals make contributions under working years and collect benefits in retirement.

Question 15

Medicare

Answer 15

Federal government’s health insurance program for the elderly and disabled.

Question 16

Social Insurance vs Social Welfare

Answer 16

Social Insurance: program that offers benefits in exchange for contributions

Social Welfare: public policies that seek to to meet the basic needs of people who are unable to provide for themselves.

Question 17

Types of Public Policies

Answer 17

Distributive Policy - policy that is funded by the whole taxpayer base to address the needs of a particular group. Example: Homeowner’s tax deduction. This is popular because benefits go to specific groups while costs are spread so widely that no one notices them. Pork barrel projects are often associated with this.

Redistributive - shifts resources from the “haves” to the “have-nots”. Example: Medicaid. This is usually controversial. Democrats and Republicans view the role of government and highlights the difference between how.

Regulatory - designed to change or restrict the behavior of certain groups or individuals. Example: environmental policy. Goal is to protect citizens and politics surrounding the creation of regulatory policy is highly confrontational.

Question 18

Trigger Events

Answer 18

When something like an event (9/11) catches the eye of a policy maker.

Question 19

Policy Process

Answer 19

Agenda setting - when a problem catches the eye of a policy maker. Often times a focusing or triggering even occurs to make this happen. Agenda space is scarce.

Policy formulation - when competing ideas and interests come together to form the contours of a policy.

Policy adoption - policy has now moved beyond the debates and adopts a policy.

Policy Implementation - important and under looked part of the process. Easier to implement if the law had clear goals, sufficient funding, and has broad support.

Policy evaluation - examine the content, implementation, or impact of a policy.

Question 20

AFDC and TANF

Answer 20

Air to Families with Dependent Children (AFDC), means-tested program without a work requirement or time limit. Just about everyone hated it.

Temporary Assistance to Need Families (TANF) - President Clinton and Congressional Republicans replaced AFDC in the 1990s with TANF. Still Means-tested but required work to exchange for time-limited benefits and gave states more control over requirements.

Question 21

General Qualities of Federal Budget

Answer 21

The majority of the Federal budget (2015) is spent on social security, unemployment, and labor. The next biggest is Medicare and health. Then comes military spending, veterans benefits, food/agriculture, education, transportation, housing/community, international affairs, every/environment, and science.

Question 22

Free Trade

Answer 22

Economic system by which countries exchange goods without imposing excessive tariffs and taxes

Question 23

American Policy Towards Labor

Answer 23

Government regulates labor. Labor has never been very strong in the US. Since the New Deal, the US adopts policies that are hostile to unions/makes it harder to unionize.

Question 24

Hidden Welfare State

Answer 24

Tax expenditures with social welfare objectives that are often not included in discussions about the U.S. welfare state.

Welfare state - system whereby the government undertakes to protect the health and well-being of its citizens, especially those in financial or social need, by means of grants, pensions, and other benefits. The hidden part is when programs offer benefits to the wealthy individuals and companies.

Question 25

Tax Expenditures

Answer 25

Subsidies delivered through the tax code as deductions, exclusions, and other tax preferences. Tax expenditures reduce the amount of tax that households or corporations owe.

Question 26

Interest Rate

Answer 26

Cost of borrowing money calculated as a percentage of the money borrowed.

Question 27

Types of Monetary Policy

Answer 27

Expansionary - increases the total supply of money in the economy more rapidly than usual.

Contractionary - expands the money supply more slowly than usual or even shrinks it.