Public Policy and Economics (Ch 14) Flashcards
economic policy
decisions a government makes that affect the production, distribution, and consumption of goods; the provision of services; the flow of income; and the accumulation of wealth.
Laissez-Faire
French for “leave things alone” and the view, in economics, that government should not interfere in the workings of the economy.
Socialism
The view in economics that economic decision making should be completely under the control of political authority.
Recession
a minor and relatively short period of economic decline
depression
a period of serious and sustained economic decline
protectionism
opposite of free trade, belief that government should protect American business and industry by restricting the flow of foreign goods into the United States.
Free Trade
belief that America’s economic interest are best served by allowing foreign producers to sell their goods without restriction in the United States.
Outsourcing
establishment, by American corporations, of factories and offices in foreign countries to take advantage of cheaper labor markets.
fiscal policy
government decisions about taxing and spending that affect the economic life of a nation
monetary policy
government decisions about how much money should circulate in the economy, and what the cost of borrowing money, the interest rate, should be.
Office of Management and Budget (OMB)
an agency in the Executive office that provides the president with budgetary information and advice and is responsible for compiling the president’s annual budget proposal to congress.
deficit
an excess of government expenditures over revenues
debt
the total amount of money that the national government owes to lenders such as banks, individual and foreign investors, insurance companies, and the variety of financial institutions that purchase government securities
surplus
an excess of government revenues over government expenditures.
net interest
charges that the government must pay to the public for the use of money borrowed to cover budget deficits and added to the interest paid to the government trust funds to create total interest costs.
Incrementalism
a model of decision making that holds that new policies differ only marginally from existing policies
mandatory programs
government programs, such as social security expenditures, in which spending automatically increases from one year to the next without specific annual appropriation action by congress.
social entitlements
programs, such as social security and medicaid whereby eligible individuals receive benefits according to law.
budget
a planned statement of expenditure that includes specific categories of spending.
fiscal year
for budget and accounting purposes in the national government; a 12 month period beginning on October 1st and ending September 30th of the following calendar year.
authorization
a congressional enactment that creates or continues a policy program and the agency administering it.
appropriation
a congressional enactment that funds an authorized program with a specific sum of money.
line-item veto
power to add an amendment to the constitution requiring a balanced budget.
balance budget amendment
a constitutional mandate that would require the federal government to operate with a budget in which revenues equaled or exceeded expenditures.
continuing resolution
legislative action taken by congress to allow spending to proceed at the previous years level when congress has not met the deadline for reaching agreement on appropriations for the next fiscal year.
congressional budget and impoundment Control act of 1974
legislation that significantly changed congressional budget procedures by creating budget committees, establishing a budget decision time table, changing the fiscal year, placing limits on presidential impoundments, and establishing the congressional budget office.
congressional budget office (CBO)
a congressional staff unit that provides congress with budgetary expertise, independent of the president’s budget staff, to help congress clarify budgetary choices.
sequestration
The process through which the president makings budget cuts in government programs to meet the mandates in law requiring ceilings on specific categories of spending.
Budget Enforcement Act of 1990
the legislation that fundamentally changed budget deficit reduction efforts from the focus on deficit targets contained in Gramm-Rudman-Hollings to a focus on ceilings, or caps, on specific categories on spending.
Statutory Pay-As- You- Go Act
Law passed in 2010 that requires budget increases to be off set by either reductions elsewhere or increased revenues.
