AP Government Cornell Notes Chapter 16

Capitalism

An economic system where private ownership and free markets drive the production, distribution, and pricing of goods and services.

Mixed Economy

A combination of private enterprise with government regulation and services.

Unemployment Rate

Measures the percentage of people actively seeking work who cannot find jobs.

Inflation

The rate of increase in prices for goods and services, affecting purchasing power.

Consumer Price Index (CPI)

Tracks the average change in prices of a standard basket of goods and services.

Laissez-faire

An economic principle that minimizes government interference, allowing markets to regulate themselves.

Monetary Policy

Managing a nation's money supply and interest rates to control inflation and stabilize currency.

FED (Federal Reserve System)

The central bank of the U.S. that regulates the money supply and supervises financial institutions.

Open Market Operations

A tool used by the FED to buy or sell government securities to influence liquidity.

Progressive Tax

A tax rate that increases as income increases.

Regressive Tax

A tax rate that decreases as income increases, disproportionately affecting low-income earners.

Earned Income Tax Credit (EITC)

A tax credit that provides refunds or reduces taxes owed for low-income workers.

Temporary Assistance for Needy Families (TANF)

Temporary financial assistance to low-income families, emphasizing work requirements.

Entitlement Programs

Benefits provided to eligible individuals regardless of income.

Means-Tested Programs

Programs that target low-income individuals or families.

Income Distribution

Describes how wealth is spread across different income groups within a population.

Relative Deprivation

A perception of being unfairly disadvantaged compared to others.

Keynesian Economic Theory

Advocates for increased government spending and reduced taxes during recessions.

Supply-Side Economics

Focuses on reducing taxes and regulations to incentivize production and investment.

Fiscal Policy

The use of government spending and taxation to influence the economy.