ap gov: economic policy

entitlement programs

Government benefits that certain qualified individuals are entitled to by law, regardless of need.

deficit

An excess of federal expenditures over federal revenues.

payroll tax (FICA)

taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

medicaid

A federal and state assistance program that pays for health care services for people who cannot afford them.

progressive tax

A tax for which the percentage of income paid in taxes increases as income increases

regressive tax

A tax for which the percentage of income paid in taxes decreases as income increases

fiscal policy

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

Keynesianism

the belief the government must manage the economy by spending more money when in a recession and cutting spending when there is inflation

corporate tax

a tax on the value of a company's profits

Medicare

provides health insurance to Americans over the age of 65 and the disabled

OMB

Office of Management and Budget; prepares the federal budget and monitors spending

monetary policy

Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

inflation

A general and progressive increase in prices

means-tested

program that establishes eligibility based on a certain income level

reserve requirements

regulations on the minimum amount of reserves that banks must hold against deposits

welfare

the health, prosperity, and happiness of the members of a community

CBO

Congressional Budget Office. This assesses the economic implications and likely costs of proposed federal programs,

discount rate

the minimum interest rate set by the Federal Reserve for lending to other banks.

revenues

The financial resources of the government. The individual income tax and Social Security tax are two major sources of the federal government's revenue.

non means tested

benefits provided by government to all citizens, regardless of income; Medicare and Social Security are examples

excise tax

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

debt

something, typically money, that is owed or due

Reaganomics

The federal economic polices of the Reagan administration, elected in 1981. These policies combined a monetarist fiscal policy, supply-side tax cuts, and domestic budget cutting. Their goal was to reduce the size of the federal government and stimulate economic growth.