AP GOV: Making Economic and Regulatory Policy (Terms)

Public policy

A specific course of action taken by government to achieve a public goal.

Policy agenda

The informal list of issues that Congress and the president consider most

important for action.

Distributive policy

A type of policy that provides benefits to all Americans.

Redistributive policy

A type of policy that takes benefits (usually through taxes) from one

group of Americans and gives them to another (usually through spending).

Rule

The precise legal definition of how government will implement a policy.

Iron triangle

A policy-making alliance that involves a very strong ties among a congressional

committee, an interest group, and a Federal Department or agency.

Issue network

A policy-making alliance among loosely connected participants that comes

together on a particular issue, then disbands.

Fiscal policy

Government policy that attempts to manage the economy by controlling taxing and spending.

Monetary policy

Government policy that attempts to manage the economy by controlling the

money supply and thus interest rates.

Inflation

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

Unemployment

The number of Americans who are out of work but actively looking for a job.

The number does not usually include those who are not looking.

Excise tax

Consumer tax on a specific kind of merchandise, such as tobacco.

Deficit

The difference between the revenues raised annually from sources of income other than borrowing and the expenditures of government, including paying the interest on past borrowing.

Tariff

Tax levied on imports to help protect the nation’s industries, labor, or farmers from foreign competition. It can also be used to raise additional revenue.

Progressive tax

A tax graduated so that people with higher incomes pay larger fraction of their income than people with lower incomes.

Regressive tax

A tax whereby people with lower incomes pay a higher fraction of their income than people with higher incomes.

National debt

The total amount of money the Federal government has borrowed to finance deficit spending over the years.

Office of Management and Budget (OMB)

Presidential staff agency that serves as a clearinghouse for budgetary requests and management improvements for government agencies

Congressional Budget Office (CBO)

An agency of Congress that analyzes presidential budget

recommendations and estimates the cost of proposed legislation.

Sales tax

General tax on sales transactions, sometimes exempting food and drugs.

Value-added tax (VAT)

A tax on increased value of the product at each stage of production

and distribution rather than just at the point of sale.

Tax expenditure

Loss of tax revenue due to Federal laws that provide special tax incentives or benefits to individuals or businesses.

Monetarism

A theory that government should control the money supply to encourage

economic growth and restrain inflation.

Federal Reserve System

The system created by Congress in 1913 to establish banking practices and regulate currency in circulation and the amount of credit available. It consists of 12 regional banks supervised by the Board of Governors. Often called simply the Fed.

Laissez-faire economics

Theory that opposes governmental interference in economic affairs

beyond what is necessary to protect life and property.

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.

Trade deficit

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

World Trade Organization (WTO)

International organization derived from the General Agreement on Tariffs and Trade (GATT) that promotes it free trade around the world.

General Agreement on Tariffs and Trade (GATT)

An international trade organization with more than 130 members, including the United States and the People’s Republic of China, that seeks to encourage free trade by lowering tariffs and other trade restrictions.

North American Free Trade Agreement (NAFTA)

Agreement signed by the United States, Canada, and Mexico in 1992 to form the largest free trade zone in the world.

Protectionism

Policy of erecting trade barriers to protect domestic industry.

Offshoring

The practice of exporting U.S. jobs to lower paid employees in other nations.

Regulation

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

Monopoly

Domination of an industry by a single company; also the company that dominates the industry.

Antitrust legislation

Federal laws (starting with the Sherman Antitrust Act of 1890) that try to

prevent a monopoly from dominating an industry and restraining trade.

Trust

A monopoly that controls goods and services, often in combinations that reduce competition.

Closed shop

A company with a labor agreement under which union membership is a condition of employment.

Union shop

A company in which new employees must join a union within a stated time

period.

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 community.

Collective bargaining

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

Environmental impact statement

Statement required by Federal law from all agencies for any project using Federal funds to assess the potential affect of the new construction or development on the environment.

Deregulation

A policy promoting cutbacks in the amount of Federal regulation in specific

areas of economic activity.