Unit 3 Glossary Quiz

Public Policy

The actions taken by government to prevent or encourage specific goals.

Office of Management and Budget

A presidential staff agency that serves as a clearinghouse for budgetary requests.

General Accounting Office

The independent agency that audits government expenditures.

Congressional Budget Office

An agency of Congress that analyzes presidential budget recommendations and estimates the costs of proposed legislation.

Tariff

A tax on imported goods.

Fiscal Policy

Government taxing and spending policy to manage the economy.

Supply Side Economics

The theory that tax cuts will expand economic activity.

Laissez-Faire Economics

Economic theory that opposes governmental interference.

Federal Reserve Bank

One of the twelve regional “banker’s banks” that in combination make up the Federal Reserve System.

Excise Tax

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

Sales Tax

A general consumer tax.

Regressive Tax

A tax that weighs most heavily on those least able to pay.

Progressive Tax

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

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.

Tax Expenditure

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

Deficit

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

Debt

The accumulated total of federal deficits, minus surpluses, over the years.

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.

Gross Domestic Product

An estimate of the total output of all economic activity in the nation, including goods and services.

Entitlement Program

Government programs such as Social Security, Medicare, and unemployment insurance to qualified citizens are “entitled” by national legislation.

Monetarism

The theory that money supply is the key factor in the economy’s performance.

Subsidy

A government payment to a specific group.

NAFTA

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

Regulation

The attempt by government to control the behavior of corporations, other governments, or citizens through altering the natural workings of the open market to achieve some desired goal.

Deregulation

A policy promoting cutbacks in the amount of federal regulation in specific areas of economic activity.

Protectionism

A policy that favors domestic producers or workers.

Taft-Hartly Act

The national law (1974) that restricted union rights.

Closed Shop

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

Union Shop

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

Collective Bargaining

Direct negotiations between an employer and a union over employment conditions.

OSHA

The federal agency concerned with employee safety and health.

Monopoly

Technically, a market in which only one supplier exists. Commonly, a market with few suppliers (oligopoly).

Sherman Anti-Trust Act (1890)

The first major national law designed to prevent business monopoly and preserve competition.

Trust

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

Interlocking Directorate

A corporation in which an officer or director sits on the board of a competitor, with the effect of restraining trade.

Clayton Act (1914)

The law that specifically exempted labor from its provisions while closing loopholes in the Sherman Anti

Independent Regulatory Agency

A government agency that exists outside the three branches of government and is responsible for enforcing particular statutes.

Federal Trade Commission

Established in 1914 to prevent unfair business methods.

National Labor Relations Act (Wagner Act)

The 1935 law recognizing the right of workers to organize and bargain collectively.

Right-To-Work Law

State law forbidding union shops.

Clean Air Act

The law of 1990 that sets air standards, provides research funds, and establishes target dates for automobile emission controls.

Monetary Policy

The policy that government adopts that attempts to manage the economy.

Yellow Dog Contract

Employer contract with new employees where they promise not to join a union.

Labor Injunction

Court order prohibiting certain acts such as performing a strike.

Foreign Service

The government agency that, as an instrument of the State Department, develops and implements foreign policy.

National Security Council

The committee created by Congress in 1947, composed of high ranking officials, that coordinate major decisions.

National Security Advisor

The person who is appointed by and directly advises the President on national security matters.

Central Intelligence Agency

The agency that gathers, evaluates and transmits information concerning foreign nations. It also carries out secret, covert operations.

Bipartisanship

The policy that stresses cooperation and a united front between political parties in foreign policy.

Economic Sanctions

A denial of export, import, or financial relations with a target country in an effort to change the nation’s policies.

Joint Chiefs of Staff

The heads of various military services, who serve as advisors to the president.

Deterrence

The philosophy underlying our defense strategy, which requires a U.S. capability to survive a “first strike” and respond so massively that they would not attempt a “second strike”.

Military Industrial Complex

An alleged alliance between top military and industrial leaders, who have a common interest in arms production and utilization.

Cold War

The post-World War II (1945-1990) tensions between the United States and the USSR and their respective allies.

Most Favored Nation Status

An international trade policy whereby the United States grants to a country the same favorable trade concessions and tariffs that our best trading partners receive.