1. Making Economic and Regulatory Policy

2. Balanced Budget Balanced Federal Budget for first time 1999. Defense spending fell due to end of cold war. Spending on domestic programs did not raise quickly Economy grew/tax revenues increased

3. Public Policy When a government acts usually happens through this. Public policy is a specific course fo action taken by government to achieve a goal.

4. Policy Agenda The informal list of issues that Congress and the president consider most important for action.

5. 6 steps: not an exact science Making assumptions about the world Picking the problem Deciding whether to act at all Deciding how much to do Choosing a tool Making rules for implementation

6. Rule A precise legal statement of how government will implement a law

7. Constitutional promotion of capitalism The Framers protected property and excessive regulation which allows for capitalism to thrive, even though capitalism is not mentioned in the Constitution

8. Fiscal policy Uses federal spending and taxation to stimulate or slow the economy

9. Monetary policy Manipulates the supply of money that individuals and businesses have in their hands to keep the economy from swinging wildly from boom to bust

10. inflation A rise in general price level (and decrease in dollar value) owing to an increase in the volume of money and credit in relation to available goods.

11. Tariffs Taxeslevied on imports to help protect a nations industries, labor, or farmers from foreign competition. It can also be used to raise additional revenue.

12. Excise Tax Consumer tax on specific kind of merchandise, such as tobacco.

13. Progressive Tax A tax graduated so that people with higher incomes pay larger fraction fo their inome than people with lower inomes

14. Regressive Tax A tax that makes people of lower incomes pay a higher amount of their wages

15. Flat Tax Everyone pays the government same proportion of their taxes

16. Deficit The difference between the revenues raised annually from sources of income other than borriwn gnad the expenditures of govenrment, including paying the interest on past borrowing

17. National Debt The total amount of money the federal government has borrowed to finance deficit spending voer the years.

18. GDP Gross Domestic Product--The total output of all economic activity in the nation, including goods and services.

19. Entitlements Government programs, such as unemployment insurance, disaster relief, and disability payments, that provide benefits to all eligible citizens. Welfare, Medicare, Medicaid, SS most expensive (uncontrollable spending)

20. Sales Tax General tax on sales transaction, sometimes exempting food and drugs

21. VAT Value-added tax--a tax on increased value of a product at each stage of production and distribution rather than just at the point of sale.

22. Tax expenditure Loss of tax revenue due to federal laws that provide special tax incentives or benefits to individuals or businesses.

23. Monetarism A theory of that government should control money supply to encourage economic growth and restrain inflation.

24. Federal Reserve System The system created by Congress in 1913 to establish banking practices and regulate currency in circulation and the amount of credit avialble. It consissts of 12 regional banks supervised by the Board of Governors. Often called simply the “Fed.”

25. Laissez-Faire economics Theory that opposes governmental interference in economic affairs beyond what is necessary to protect life and property.

26. Keynesian economics Economic theory based on the principles of John Maynard Keynes stating that government spending should increase during business slumps and be curbed during booms.

27. Trade deficit An imbalance in international trade in which the value of imports exceeds the value of exports.

28. WTO World Trade Organization--International organization derived from the General Agreement on Tariffs and Trade that promotes free trade around the world.

29. GATT General Agreement on Tariffs and Trade--international trade organization with more than 130 members (US and China) that seeks to encourage free trade by lowering tariffs and other trade restrictions.

30. NAFTA North American Free Trade Agreement- -Agreement signed by the US., Canada, and Mexico in 1992 to form the largest free trade zone in the world..

31. Protectionism Policy of erecting trade barriers to protect domestic industry.

32. Regulation Efforts by government to alter the free operation of the market to achieve social goals such as protecting workers and the environment.

33. Monopoly A board game that I always win. Domination of an industry by a single company; also the company that dominates the industry

34. Antitrust legislation Federal laws (starting with Sherman antitrust legislation in 1890) that tried to prevents a monopoly from dominating an industry and restraining trade.

35. trust A monopoly that controls goods and services, often in combination that reduce competition.

36. Labor Injunction A court order forbidding specific individuals or groups from performing certain acts (such as striking) that the court considers harmful to the rights and property of an employer or a community. (Eugene Debs--Pullman strike)

37. Collective bargaining Method whereby representatives fo the union and employer determine wages, hours and other conditions of employment through direct negotiation.

38. Environmental impact statement A statement required by federal law from all agencies for any project using federal funds to assess the potential effect of the new construction or development on the environment.

39. Chapter 18 Who is in charge? Depends, federal, state, local, private.

40. Medicaid Federal program that provides medical benefits for low-income persons.

41. Medicare National health insurance program for the elderly and disabled.

42. Welfare pg. 498-500 Clinton changed welfare Point is to promote jobs, not money. Gave block grants to states, states are now in charge of welfare.

43. Chapter 19 Defense Spending Military Aid Military Intervention Sanctions

44. Economic Sanctions Denial of export, import, or financial relations with a target coutnry in an effort to change the nation’s policies.

45. Politics of Defense Spending A major American industry “Military Industrial Complex”

46. Military Industrial Complex Eisenhower’s speech (535). Iron triangles with congressional committees, interest groups and government agencies that share common policy concerns.