Unit 6: Chapter 16, 17, & 18 Flashcards
Tax base
The overall wealth (income and assets of citizens and corporations)that the government can tax to raise revenue
American dream
The belief that in the United States hard work and persistence will reap a financially secure happy and healthy life with upward social mobility
Economy
A system for producing distributing and consuming goods and services
Economic policy
A governments diverse policies geared toward promoting the nation’s economic health
Pure capitalist economy
An economy in which private individuals and companies own the modes of producing goods and services and the government does not enact laws aimed at influencing the marketplace transactions that distribute those goods and services
Regulated capitalist economy (mixed economy)
An economy in which the government enacts policies to influence the health of the economy
Laissez-faire
Hands-off stance of a government in regard to the marketplace
Income inequality
The gap in the proportion of national income held by the richest compared to that held by the poorest
Balanced budget
A budget in which the governments expenditures are equal to or less than its revenues
Deficit spending
Government expenditures costing more than is raised in Taxes leading to borrowing and debt
Keynesian economics
Theory that recommends that during a recession the national government should increase it’s spending and decrease taxes and during a boom it should cut spending and increased taxes
Recession
An economic downturn during which unemployment is high and the production of goods and services is low
Depression
A long-term and severe recession
Economic boom
Rapid economic growth
Fiscal policy
Government spending and taxing, and their effect on the economy
Supply side economics
Theory that advocates cutting Taxes and deregulating business to stimulate the economy
Deregulation
Reduction or elimination of regulatory restrictions on firms and industries
National debt
The total amount of money the national government owes to its creditors
Monetarism
Theory that says the governments proper economic role is to control the rate of inflation by controlling the amount of money in circulation
Inflation
The decreased value of money as evidenced by increased prices
GDP Gross domestic product
The total value of all goods and services produced within a country’s borders
Progressive tax
A tax that takes a larger percentage of the income of wealthier taxpayers and a smaller percentage of the income of lower income text
Flat tax (proportional tax)
A tax that takes the same percentage of each taxpayers income
Regressive tax
A tax that takes a greater percentage of the income of lower income earners than of higher income earners
Discretionary spending
Payment on programs for which Congress and the president must approve budget authority each year in appropriation legislation
Mandatory spending
Government spending for debts and programs whose budget authority is provided in legislation other than annual appropriation Acts. this budget authority is open ended obligating the government to pay for the program as long as it exists
Executive budget
The budget document and budget message that explains the presidents fiscal plan
Continuing resolution
An agreement of the House and Senate that authorizes agencies not covered by approved appropriation laws to continue to spend money within their previous budget year’s levels
Budget surplus
Money left over after all expenses are paid
Budget deficit
More money spent than collected through revenues
Debt ceiling
The legal borrowing limit for the national government
Sequester
Automatic spending out
Monetary policy
The body of government policies controlled by the Federal Reserve system aimed at influencing the supply of money in the marketplace to maintain price stability
Trade policy
A collection of tax laws and regulations that supports the country’s international commerce
Protectionist trade policy
Establishment of trade barriers to protect domestic goods from foreign competition
Tarrif
A special tax on imported goods
Subsidy
A tax break or another kind of financial support that encourages behaviors the government deems beneficial to the public good
Free-trade policy
Elimination of tariffs and non tariffs trade barriers so that the international trade is expanded
Trade deficit
A negative balance of trade in which imports exceed exports
Safety net
A collection of public policies ensuring that the basic physiological needs of citizens are met
None contributory program
A benefit provided to a targeted population paid for by a proportion of the money collected from all taxpayers
Contributory program
A benefit provided only to those who paid the specific tax created to fund the benefit
Entitlement program
A government benefit guaranteed to all who meet the eligibility requirements
Direct subsidy
A cash transfer from general revenues to particular persons or private companies engaged in activities that the national government believes support the public good
Social Security
Providing monetary assistance to people with an inadequate or no income
Means tested benefit
A benefit for which eligibility is based on having an income below a specified amount typically based on a percentage of the poverty guidelines
Medicaid
Largest source of funding for medical and health related services for people with low income in the US
Medicare
National social insurance program administered by the US federal government since 1966 guarantees access to health insurance for Americans age 65 and older who have worked and paid into the system
Patient protection and affordable care act (Obama care)
Increased the quality and affordability of health insurance
Regulatory policy
Governments ability to pass and enact laws and regulations that will corporate America under check
Federal Reserve
Central Bank of the US Bank of government and regulates all US banks founded in 1913
Distributive policies
Money received from Taxes provides benefits and services to a certain targeted group
Redistributive policies
Giving money to specific private people who need it
Dream act
This bill would provide conditional permanent residency to certain immigrants of good moral character who graduate from US high schools and arrived in the US as minors and lived in the country continuously for at least five years prior to the bills enactment
What is the public policy process making?
- Agenda setting-policymakers focus publics attention on key issues
- Policy formulation-Congress and Pres. take up issue and debate
- Policy adoption-policy is passed
- Policy implementation-government agencies establish procedures, and rules and regulations, issue money grants and essentially apply the law
- Policy evaluation-analyst inside and outside government determine if policy is addressing problem and if revisions need to be made
What are the three basic theories of economics?
Pure capitalism Socialism and mixed
What are the two basic kinds of actions (policies) that the national government takes when attempting to ensure a healthy US economy
Fiscal and monetary
Which of the two types of policy does Keynesian and supply-side economics use?
Fiscal policy
What is stagflation?
A period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)
What was Reaganomics?
-There were tax cuts -there was Deregulation of industries in banks -there was decrease in government spending on domestic programs but a massive increase in military spending. -Continued Nixon’s new federalism a.k.a. devolution
What are the three tools the Fed uses for setting monetary policy?
- Raising or lowering the reserve requirement
- Raising or lowering the discount rates a.k.a. interest rates
- selling US treasury securities a.k.a. savings bonds
What is the reserve requirement?
Minimum amount of cash or cash equivalents that banks and other depository institutions are required by law to keep on hand. These are not used for lending or investing. These are a safeguard against a sudden demand for withdrawals.
What authority does the fed have?
The Fed has the authority to set monetary policy and has supervision and regulatory authority over more than 3000 banks
How does the Fed control the money supply?
- It can buy US treasury bonds this increasing the money supply. The fed the fed sells these bonds to decrease the money supplies which tends to raise interest rates
- It can change the interest rate it charges member banks to borrow money from the federal reserve this is known as discount rate
- Regulate the reserve requirement that banks must keep.
How does changing the reserve requirements help the Fed control the money supply?
Lowering the requirement allows banks to lend out more thus stimulating the economy. Increasing the reserve requirement allows banks to lend less since more must be kept in the bank
How does the change of interest-rate help the Fed control the money supply
When inflation is a threat the federal increase rates in order to tighten the money supply. During a recession the fed will lower interest rates to stimulate borrowing and growth.
What is the fed more concerned about inflation or unemployment?
Inflation
True or false the fed is our central-bank.
True
The Fed’s primary responsibility is….
Monetary policy NOT FISCAL POLICY
The Fed has the biggest impact on….
Interest rates
What ability did the congressional budget process and impoundment control act of 1974 remove from the president?
The ability to impound money appropriated by Congress for policies he doesn’t agree with
What is the concurrent resolution?
Both chambers of Congress must agree to a spending And amount that must be raised
What is budget reconciliation?
The process of rewriting legislation to comply with the agreed upon budget resolution
What is the indexed benefit?
The longer you paid in the longer you will reap out
What is OASI?
Old age survivors insurance program provided income individuals or families when a worker covered by the program retired this contributory cost transfer program is a traditional retirement insurance component of Social Security. This is an entitlement program and also a contributory program
What is TANF?
Temporary assistance to needy families at this initially supported stay-at-home single widows with children and on assisting needy single-parent and two parent families with children to focus more over has changed from encouraging women to stay home with the children to one of requiring recipients to work and to take on greater financial responsibilities for the children
What are four domestic policy tools used by the federal government?
- Laws and regulations-laws which individuals and companies must comply with
- Direct provision of public goods- hiring public servants to give public goods
- Cash transfers-giving money to those eligible to need money from the government
- Loans and loan guarantees-lending money to people for big expenses like a home
What are six measures of economic health?
- GDP 2. Level of inflation 3. Unemployment rate 4. CPI 5. HDI 6. Quality of people’s life
What is CPI?
Consumer price index the most common measure of inflation it gauges the average change in prices over time of the market basket of goods and services including food clothing shelter fuels transportation costs and medical costs
What is HDI?
Human development Index. Measure to determine how well a country’s economy is providing for a long and healthy life educational opportunities and a decent standard of living
What is social regulation?
Regulating the safety of products
What is nondiscretionary spending?
Spending that is required by law
What is grant in aid?
An amount of money given to a local government institution or particular scholar
What is contracting out?
An agreement between two or more parties for doing or not doing
something specified
What is the process of the federal budget process?
A year and a half before beginning of the fiscal year the budget process begins in the Office of Management and agencies formulate their funding request and OMB hears their agencies explanation of why they are raising the funding they need then they create the national budget and presidents submits budget to Congress. Congressional Budget Office comes in and analyzes it then they come up with a maximum and minimum then make appropriation bills
