Unit 6: chapters 17, 18, 19, 20 Flashcards
capitalism
an economic system in which individuals and corporations, not the government, own the principle means of production and seek profits. pure capitalism means the strict noninterference of government in business affairs.
mixed economy
an economic system in which the government is deeply involved in economic decisions through its role as regulator, consumer, subsidizer, taxer, employer, and borrower. the united states can be considered a mixed economy.
multinational corporations
large businesses with cast holdings in many countries. many of these companies are larger than most governments.
securities and exchange commission (sec)
the federal agency created during the new deal that regulates stock fraud.
minimum wage
the legal minimum hourly wage for large employers, currently $8.25 in maryland, and the federal wage is $7.25.
labor union
an organization of workers intended to engage in collective bargaining.
collective bargaining
negotiations between representatives of labor unions and management to determine acceptable working conditions.
unemployment rate
as measured by the bureau of labor statistics (bls), the proportion of the labor force actively seeking work but unable to find jobs.
inflation
the rise in prices for consumer goods. inflation hurts some but actually benefits others. groups such as those who live on fixed incomes are particularly hard hit, while people whose salary increases are tied to the consumer price index but whose loan rates are fixed may enjoy increased buying power.
consumer price index (cpi)
the key measure of inflation that relates the rise in prices over time.
laissez-faire
the principle that government should not meddle in the economy.
monetary policy
based on monetarism, monetary policy is the manipulation of the supply of money in private hands by which the government can control the economy.
monetarism
an economic theory holding that the supply of money is the key to a nation’s economic health. monetarists believe that too much cash and credit in circulation produces inflation.
federal reserve system
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. the seven members of its board of governors are appointed to 14-year terms by the president with the consent of the senate.
fiscal policy
the policy that describes the impact of the federal budget–taxes, spending, and borrowing–on the economy. unlike monetary policy, which is mostly controlled by the federal reserve system, fiscal policy is almost entirely determined by congress and the president, who are the budget makers.
keynesian economic theory
the theory emphasizing that government spending and deficits can help the economy weather its normal ups and downs. proponents of this theory advocate using the power of government to stimulate the economy if it is lagging.
supply-side economics
an economic theory, advocated by president reagan, holding that too much income goes to taxes and too little money is available for purchasing and that the solution is to cut taxes and return purchasing power to consumers.
protectionism
economic policy of shielding an economy from imports.
world trade organization (wto)
international organization that regulates international trade.
antitrust policy
a policy designed to ensure competition and prevent monopoly, which is the control of a market by one company.
food and drug administration (fda)
the federal agency formed in 1913 and assigned the task of approving all food products and drugs sold in the united states. all drugs, with the exception of tobacco, must have fda authorization.
national labor relations act
a 1935 law, also known as the wagner act, that guarantees workers the right of collective bargaining, sets down rules to protect unions and organizers, and created the national relations board to regulate labor management relations.
social welfare policies
policies that provide benefits to individuals, particularly to those in need.
entitlement programs
policies for which expenditures are uncontrollable because congress has in effect obligated itself to pay x level of benefits to y number of recipients. each year, congress’s bill is a straightforward function of the x level of benefits times the y number of beneficiaries. social security benefits are an example.
means-tested programs
government programs available only to individuals below a poverty line.
income distribution
the “shares” of the national income earned by various groups.
income
the amount of funds collected between any two points in time.
wealth
the amount of funds already owned. wealth includes stocks, bonds, bank deposits, cars, houses, and so forth. throughout most of the last generation, wealth has been much less evenly divided than income.
poverty line
a method used to count the number of poor people, it considers what a family would need to spend for an “austere” standard of living.
feminization of property
the increasing concentration of poverty among women, especially unmarried women and their children.
proportional tax
a tax by which the government takes the same share of income from everyone, rich and poor alike–for example, when a rich family pays 20 percent and a poor family pays 20 percent.
progressive tax
a tax by which the government takes a greater share of the income of the rich than of the poor–for example, when a rich family pays 50 percent of its income in taxes and a poor family pays 5 percent.
regressive tax
a tax in which the burden falls relatively more heavily on low-income groups than on wealthy taxpayers. the opposite of a progressive tax, in which tax rates increase as income increases.
earned income tax credit (eitc)
a “negative income tax” that provides income to very poor individuals in lieu of charging them federal tax.
transfer payments
benefits given by the government directly to individuals. transfer payments may be either cash transfers, such as social security payments and retirement payments to former government employees, or in-kind transfers, such as food stamps and low-interest loans for college education.
social security act of 1935
a 1935 law passed during the great depression that was intended to provide a minimal level of sustenance to older americans and thus save them from poverty.
personal responsibility and work opportunity reconciliation act (prwora)
the official name of the welfare reform law of 1996.
temporary assistance for needy families (tanf)
once called “aid to families with dependent children,” the new name for public assistance to needy families.
immigration
will be added
simpson-mazzoli act
will be added
social security trust fund
will be added
health maintenance organization (hmos)
organizations contracted by individuals or insurance companies to provide health care for a yearly fee. such network health plans limit the choice of doctors and treatments. about 60% of americans are enrolled in hmos or similar programs.
national health insurance
a compulsory insurance program for all americans that would have the government finance citizens medical care. first proposed by president harry s. truman, the plan has been soundly opposed by the american medical association.
medicare
a program added to the social security system in 1965 that provides hospitalization insurance for the elderly and permits older americans to purchase inexpensive coverage for doctor fees and other expenses.
medicaid
a public assistance program designed to provide health care for poor americans. medicaid is funded by both the states and the national government.
environmental protection agency (epa)
an agency of the federal government created in 1970 and charged with administering all the government’s environmental legislation. it also administers policies dealing with toxic wastes. the epa is the largest federal independent regulatory agency.
clean air act of 1970
the law aimed at combating air pollution
water pollution control act of 1972
a law intended to clean up the nation’s rivers and lakes. it requires municipal, industrial, and other polluters to use pollution control technology and secure permits from the environmental protection agency for discharging waste products into waters.
endangered species act of 1973
this law requires the federal government to protect actively each of the hundreds of species listed as endangered–regardless of the economic effect on the surrounding towns or regions.
superfund
a fund created by congress in the late 1970s and renewed in the 1980s to clean up hazardous waste sites. money for the fund comes from taxing chemical products.
global warming
term for the observed century-scale rise in the average temperature of the earth’s climate system and its related effects.
north atlantic treaty organization (nato)
created in 1949, an organization whose members include the united states, canada, most western european nations, and turkey, all of whom agreed to combine military forces and to treat war against one as war against all.
united nations (un)
created in 1945, an organization whose members agree to renounce war and to respect certain human and economic freedoms. the seat of real power in the un is the security council.
foreign policy
a policy that involves choice taking, like domestic policy, but additionally involves choices about relations with the rest of the world. the president is the chief initiator of foreign policy in the us.
secretary of defense
the head of the department of defense and the president’s key adviser on military policy; a key foreign policy actor.
secretary of state
the head of the department of state and traditionally a key adviser to the president on foreign policy.
european union (eu)
an alliance of the major western european nations that coordinates monetary, trade, immigration, and labor policies, making its members one economic unit. an example of a regional organization.
joint chiefs of staff
the commanding officers of the armed services who advise the president on military police.
central intelligence agency (cia)
an agency created after world war II to coordinate american intelligence activities abroad. it became involved in intrigue, conspiracy, and meddling as well.
isolationism
a foreign policy course followed throughout most of our nation’s history, whereby the united states has tried to stay out of the other nation’s conflicts, particularly european wars. isolationism was reaffirmed by the monroe doctrine.
containment doctrine
a foreign policy strategy advocated by george kennan that called for the united states to isolate the soviet union, “contain” its advances, and resist its encroachments by peaceful means if possible, but by force if necessary.
cold war
war by other than military means usually emphasizing ideological conflict, such as that between the united states and the soviet union from the end of world war II until the 1990s.
arms race
a tense relationship beginning in the 1950s between the soviet union and the united states whereby one side’s weaponry became the other side’s goal to procure more weaponry, and so on.
détente
a slow transformation from conflict thinking to cooperative thinking in foreign policy strategy and policymaking. it sought a relaxation of tensions between the superpowers, coupled with firm guarantees of mutual security.
strategic defense initiative (sdi)
renamed “star wars” by critics, a plan for defense against the soviet union unveiled by president reagan in 1983. sdi would create a global umbrella in space, using computers to scan the skies and high-tech devices to destroy invading missiles.
interdependency
mutual dependency, in which the actions of nations reverberate and affect one another’s economic lifelines.
tariff
a special tax added to imported goods to raise the price, thereby protecting american businesses and workers from foreign competition.
balance of trade
the ratio of what is paid for imports to what is earned from exports. when more is imported than exported, there is a balance-of-trade deficit.
organization of petroleum exporting countries (opec)
an economic organization, consisting primarily of arab nations, that controls the price of oil and the amount of oil its members produce and sell to other nations. the arab members of opec caused the oil boycott in the winter of 1973-1974.
