Chapter 11 Econ. Vocabulary

Regulation

The process in which the federal government exercises its constitutional powers by establishes laws and rules designed to influence economic behavior in desirable ways is known as ________.

________ can involve setting prices, establishing product and workplace standards, and limiting entry into an industry.

Eminent domain

___________ is the power to force the transfer of property from a private owner to the government for a public purpose.

The power of a government to take an individual's property for public use if the owner is fairly compensated.

Takings Clause

The ______ of the Fifth Amendment states,

No person shall be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Regulatory agency

The FTC is a ________ —a unit of government that makes and enforces standards for an industry or area of economic activity.

Price fixing

The illegal practice of _______ occurs when competitors agree on a price for a good or service.

_______ can take many forms, from adopting a formula for computing prices to setting a minimum fee for services.

Bid rigging

Purchasers-including federal, state, and local governments-often acquire goods and services by seeking bids from competing firms. _______ occurs when competitors agree in advance who will submit the winning bid.

Market division

The tactic known as _______ occurs when competitors agree to divide a market among themselves. In one type of scheme, each competitor sells to only certain customers. In another, each competitor sells in only certain geographic areas.

Merger

The Justice Department and the FTC also monitor _______, in which two separately owned firms combine into one firm. A ______ is illegal if it will substantially lessen competition or tend to create a monopoly.

Regulatory capture

_______ occurs when regulatory agencies are dominated, or captured, by the industries they regulate. Captured agencies act in the best interests of the industry, rather than in the public interest.

Deregulation

_________ is the process of removing government restrictions on firms in order to promote competition or encourage economic activity. Since the 1970s, Congress has ________ the banking, airline, cable television, electric power, and interstate trucking industries, among others.

Public provision

To support this positive externality, federal and state governments allocate resources to education. They do this through subsidies and _______, which means providing the education itself.

Vouchers

______ are another form of subsidy. A ______ is a coupon to be used to purchase a specific good or service. Some state and local governments provide school ______ to low-income families to help them send their children to private schools.

Command-and-control policies

The term ___________ comes from the military and refers to the use of authority by a commanding officer to accomplish a mission. Regulatory agencies that adopt ________ follow a similar approach, issuing rules that others are expected to follow.

Market-based policies

Economists generally prefer the use of _________ to deal with negative externalities. Such policies use incentives, rather than rules and enforcement, to change producers’ behaviors.

Cap and trade

Another market-based policy is known as _______. When using this approach, the government sets a limit, or cap, on the total amount of a pollutant that businesses can emit each year.

Pollution permits

The government then issues a limited number of _______ to every firm that emits that type of pollution. The permit gives the holder the right to pollute a certain amount.

Common resource

The air, for example, is what economists call a ________. A resource that everyone has access to and that can easily be overused or destroyed. Examples include the atmosphere and the oceans.

Tragedy of the commons

Everyone has access to a common resource. For this reason, it can easily be overused and even destroyed. Economists call this problem the __________.

Tolls

One policy is to require everyone who uses a common resource to pay a ___, or fee. Highway ___, for example, provide revenue that can be used to maintain roads. They also function as a corrective tax.

Quota

A second way to preserve a common resource is to establish a _____, or maximum amount of a resource that a person can use or consume in a given period of time.

Privatize

A third way to deal with a tragedy of the commons is to turn the common resource into a private resource—that is, to ______ it. Private ownership restores the incentive to preserve the resource.

Government failures

Economists describe situations in which government intervention in the economy leads to an inefficient use or allocation of resources as ________. Such failures arise for several reasons.

Logrolling

Politicians who want to stay in office may engage in ______ — agreeing to vote for another lawmaker's legislation if that lawmaker agrees to vote for their own legislation.

Economic stimulus

Reacting to the uncertainty, consumers cut back on spending. To generate more spending, Congress enacted an ________ package-legislation specifically designed to stimulate business activity.

Poverty rate

Another tool for measuring the distribution of income is the ______. This rate is the percentage of households whose incomes fall below a certain dollar amount determined by the Census Bureau.

Poverty threshold

That dollar amount, called the _______, is the estimated minimum income needed to support a family. The _______ varies depending on family size and composition.

Economic mobility

A hallmark of American society is _______. People who work hard are usually able to move up the economic ladder. As a result, relatively few families remain in poverty for the long term.

Income redistribution

Since the 1960s, most antipoverty programs have involved some form of ________, a policy designed to reduce the gap between the rich and the poor. This policy works by taxing wealthier members of a society and then distributing that money to the poor to achieve greater income equality.

Cash transfers

The TANF program, funded largely by the federal government but run by the states, provides benefits, services, and work opportunities to needy families. In some states, TANF benefits come in the form of _______, or direct payments of cash from the government to individuals.

In-kind transfers

Other TANF benefits are distributed in the form of goods or vouchers, rather than cash. These _______ include food stamps, public housing, school lunches, and Medicaid.

Earned Income Tax Credit

The government also helps the working poor through the ___________. Low-wage workers can claim this credit when they file their federal income tax forms.

Unemployment insurance

Employers, through federal and state taxes, contribute to a fund that provides __________ for workers. If workers are laid off from their jobs, the state sends them payments for a certain period of time or until they find another job.

Means-tested programs

TANE, food stamps, Medicaid, and the Earned Income Tax Credit are what economists call ________ — that is, they are tied to family income. The more a family earns, the fewer benefits that family can claim.

Corrective tax

One market-based policy is a _______, which the government levies on producers of pollution. _______ give producers an incentive to reduce their harmful waste products because the tax acts as a penalty.

Quintiles

Every year, the U.S. Census Bureau charts the distribution of income in the United States. It starts by ranking households on the basis of their incomes. Then it divides the entire list of households into five equal parts, called ________.