Economic and Environmental Policy

Flashcards covering key vocabulary and concepts related to economic and environmental policy, government regulation, and fiscal/monetary tools.

Economy

A system of production and consumption of goods and services allocated through exchange.

Laissez-faire economics

Doctrine advanced by Adam Smith in The Wealth of Nations (1776) suggesting private firms should be free to make their own decisions, with demand guiding supply through the 'invisible hand'.

Fair Labor Standards Act (1938)

U.S. labor law that contains the minimum wage provisions.

National Industrial Recovery Act of 1933

The first federal minimum wage was instituted here.

Economic efficiency

Output of goods and services is the highest possible given the amount of input.

Economic equity

A transaction fair to each party.

Food and Drug Administration

Founded in 1907 during the Progressive Era to stop corrupt business practices.

External Outlets

The unpaid costs of business activity.

Environmental Protection Agency (EPA)

Responsible for enforcing environmental law, created in 1970.

National Labor Relations Act of 1935

Protects union activities and workers.

Fiscal policy

The government’s taxing and spending decisions.

Demand-side economics

Emphasis on the consumer (demand) component of the supply–demand relationship.

Supply-side economics

Places emphasis on the production side of the supply–demand equation.

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.

Monetary policy

Based on adjustments to the amount of money in circulation.

Federal Reserve System (the Fed)

Controls the money supply, created by the Federal Reserve Act of 1913.

Reserve Rate

Amount of their assets that member banks must keep on hand. The rate can be lowered to increase the money supply or raised to decrease it.

Interest Rate

Interest rate charged to member banks when they borrow from the Fed. The rate can be lowered to increase the money supply or raised to decrease it.

Inflation

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