Economic Policy

What is economic policy?

Government actions to manage the economy.

What is public policy?

Government decisions to achieve goals.

 What is monetary policy?

Federal Reserve control of money supply and interest rates.

Who controls monetary policy?

The Federal Reserve System (the Fed).

 What is fiscal policy?

Government taxing and spending controlled by Congress and the President.

 What is a budget deficit?

When government spending exceeds revenue.

What is the national debt?

Total money owed from accumulated deficits.

What is a progressive tax?

Higher income = higher percentage paid.

What is a regressive tax?

Lower income pays a higher percentage (ex: sales tax).

What is a tax expenditure?

A tax break or loophole.

What is a public good?

A good that is non-excludable and non-rival (e.g., defense, roads).

What is a monopoly?

One company controls an entire market.

 What is an externality?

A cost or benefit to someone not involved in the transaction.

What is incomplete information?

When consumers lack necessary info to make decisions.

 What is antitrust policy?

Laws preventing monopolies and promoting competition.

 What is deregulation?

Reducing government rules; example: airline industry.

What is a subsidy?

Government financial support to an industry.

What is contracting power?

When government uses contracts to influence business behavior.

What does the FDA do?

Regulates food and drug safety.

What does the CFPB do?

Protects consumers in financial markets.

What does the NLRB do?

Regulates labor relations and unions.

 What are the main economic goals?

Stable markets, economic prosperity, and protecting workers/consumers.

 What is the SEC?

Securities and Exchange Commission; regulates stock markets.

 What is mandatory spending?

Spending required by law (Social Security, Medicare).

What is discretionary spending?

Spending Congress chooses each year (military, education).