govt test 4 real

Economy

a system of production and consumption of goods and services allocated through exchange

Mixed economy

an economic system combining private enterprise with government intervention balancing market efficiency with social welfare

Adam Smith

advanced the doctrine of laissez-faire economics

Laissez-faire economics

a classic economic philosophy holding that owners of business should be allowed to make their own production and distribution decisions without government regulation or control

Regulation

Government restrictions on the economic practices of private firms.

Economic efficiency definition

An economic principle holding that firms should fulfill as many of society's needs as possible while using as few of its resources as possible.

Economic inefficiency occurs when

the output of goods and services is the highest possible for the amount of input (such as labour and material) that goes into producing it

Deregulation

the rescinding of excessive government regulations for the purpose of improving economic efficiency

Overregulation has been curbed with

deregulation

The 2008 mortgage crisis was a result of

deregulation carried too far

Too little or too much regulation can result in

economic inefficiency

Overregulation results

in higher-priced goods that are more expensive for consumers and less competitive in the domestic and global markets

Economic equity

ensuring that the outcome of an economic transaction is fair to each party

Economic equity outcome

can usually be considered fair to each party enters into a transaction freely and is not unknowingly at a disadvantage

Food and Drug Administration (FDA)

founded in 1907 was part of reform effort charged with keeping unsafe foods and drugs from being sold to unsuspecting customers

Fair Labor Standards Act of 1938

required employers to pay workers a minimum wage

Representative Actions by Government for economic efficiency

preventing restraint of trade; requiring producers to pay the cost of environmental damage; regulating business only when justified on a cost benefit basis

Representative Actions by Government for economic equity

requiring firms to treat workers and consumers fairly

The president's discretion

in installing and removing agency heads has led them to be more responsive to the president than to the firms they oversee

Externalities

the unpaid costs of business activity

Before the 1960's the fed govt didn't require

firms to pay to reduce externalities

Silent spring 1962 helped

launch the environmental movement and inspired new legislation exposing the threat to birds and animals from pesticides

The Environmental Protection Agency (EPA)

created in 1970 is responsible for enforcing environmental law

Global warming

receives more attention today than nay other environmental issue

There is a lack of consensus among U.S. policymakers

Over global warming issues

The united state lags behind in

emissions reduction efforts of greenhouse gas emissions

Loans and tax breaks

are among the ways that government promotes business interest

The National Labor relations act of 1935

protects union activities and workers

Government support for labor also includes

minimum benefits, safer and more healthful working conditions, and nondiscriminatory hiring practices

Supreme court 2018

overturned a ruling that had allowed unions to require public sector workers to pay dues

Right to work laws

give workers in a unionized workplace the notion of not joining the union receiving the benefits of union negotiated contracts but don't contribute dues

Homestead Act of 1862

federal government provided 160 acres of free land to any family that staked a claim built a house and farmed the land

Who are the most heavily subsidized

american farmers

Subsidies are intended to

reduce market risks and stabilize farm incomes

What effects crops and livestock

Weather, global conditions, and other factors

Federal subsidies lend stability to

farmer's yearly income.

Economic recession

a moderate but sustained downturn in the economy. This is normal cycle of ups and downs

Economic depression

A very severe and sustained economic downturn. Rare, last one was in 1930's

Fiscal policy

the government's taxing and spending decisions.

Economic depression

an exceptionally steep and sustained decline in the economy.

Demand-side economics

emphasis on the consumer (demand) component of the supply-demand relationship.

When the economy is sluggish government places

additional money in the hands of consumers. Direct cash payments.

Democratic lawmakers have typically preferred

demand side policy

Republicans have preferred

supply side economics

Supply side economics is

emphasis on the production side of the supply-demand equation. The theory holds that if firms and wealthier individuals have more money to spend, they will invest it in production(supply), boosting employment and consumer spending.

Annual budget deficit

the federal government spends more in a year than it receives in tax and other revenues.

national debt

the total the federal government owes to its creditors.

In recent years the Federal Government has heavily borrowed each year By issuing

Treasury securities in the form of Treasury bills, notes, and bonds.

Last balanced budget was in

the late 1990s.

Monetary policy

based on adjustments to the amount of money in circulation.

Monetarists(economist who emphasize monetary policy)

contend the money supply is the key to a healthy economy.

The Federal Reserve Act of 1913 created

the Federal Reserve System (the Fed), which controls the money supply.

The fed is Appointed by

the President and approved by the Senate

The fed is directed by

a board of governors with seven members

The fed seven members serve

14-year terms,

The fed chair and vice-chair who serve

for 4-year terms.

Inflation

increases in the average level of prices of goods and services while wages stagnate.

To fight inflation the Fed reduces the currency in circulation and the effect is

Increasing the interest rate on loans to member banks

Compared to fiscal policy monetary policy can be

implemented quickly.

The Fed has the ability to react relatively quickly In contrast changes in

fiscal policy usually take months to implement

The fed is a

"bankers" bank that protects member banks.

Members of the Federal Reserve Board are appointed by the President and

confirmed by the Senate but are not subject to removal.

fiscal policy

A tool of economic management by which government can attempt to maintain a stable economy through its taxing and spending policies.

monetary policy

A tool of economic management that is based on the manipulation of the amount of money in circulation.

Progressive income tax

tax where the marginal tax rate increases as income rises

Poverty line

set at the annual cost of a thrifty food budget multiplied by three

The economic disadvantaged are concentrated in certain groups

urban and rural residents, minorites, single parent female headed families and children

Public assistance

funded with general tax revenues and available only to those in financial need

Public assistance examples

TANF, Medicaid, food stamp

public assistance is established by

Means test

Means test requirements

must prove income is low enough

In kind benefits

not cash can be used only for certain things

Social insurance

eligibility restricted to individuals who pay special payroll taxes while working.

Entitlement program

any individual who meets the eligibility criteria is entitled to the benefit.

Equality of opportunity

that all people should have a reasonable chance to succeed if they make the effort.

Realism theory

belief that nation states are inherently self- interested and the world is chaotic and dangerous.

Liberalism theory

belief that the world is dangerous but that individual liberty is paramount.

Soft Power

non-coercive, diplomacy and foreign aid

Hard power

coercive primarily military force but also economic sanctions

The deterrence policy pursued by the United States is based on

the concept of mutually assured destruction (M A D)

Which theory holds that nation states are inherently self interested and the world is chaotic and dangerous

realism theory

which agency has the primary responsibility for diplomacy

department of state

There are roughly ________ countries in the world.

200

an example of soft power

Peace Corps

Diplomacy is a type of

soft power

how was president George w. bush able to convince Americans that the invasion of Iraq in 2003 was necessary

he used the news media to carry his message

who initiated the strategic arms limitation talks

Richard nixon

the policy of deterrence is based on the idea that

a nation will be deterred from launching a full scale nuclear attack by the knowledge that it too would be obliterated

defense spending is highest in

United States

Defense spending is second-highest in

China

Which is the longest war in American history?

Afghanistan War

the idea that major nations should act together in response to problems and crises is called

multilateralism

Which president called for a "new world order"?

George H. W. Bush

which of the following makes the United States the strongest of the worlds three economic centers

its vast, fertile plains and advanced farming methods have made it the worlds leading agricultural producer

The three major economic centers of the world are the

united state, china, and the European Union

together the U.S., the European Union, and china produce what share of the worlds goods and services

more than half

The term "asymmetric war" best applies to

transnational terrorism

which country recently became the world's leading oil and natural gas producer

the united states

economic efficiency requires

that the output of goods and services is the highest possible given the amount of input used to produce them.

The term externalities refers to

the costs of production that are incurred by society.