module G: the economy and income security

economic growth

_________ suggests expanding opportunities for people and business.

low inflation

occurs when there is little change in the price producers and consumers pay for goods and services.

full employment

an employment rate of 4 to 5 percent is considered _________

positive balance of trade

being a net exporter while importing a smaller portion of whtat they consume

classical model

supply and demand are natural regulatory tools; thus, the economy regulates itself.

laissez-faire

the french term to describe the policy that calls for no interference by the government of anyone else in the regulation of an individual’s affairs. 

gross domestic product

the total monetary value of all goods and services produced within a country in a given time period

keynesianism

the government could act as an employer and contractor of last resort

new deal

FDR’s program of economic recovery

works progress administration

agency designed in the New Deal to get people off the street and put them to work

fiscal policy

taxing and spending

monetary policy

managing the supply of money

regulation

rules that affect the incentives for undertaking various activities.

federal reserve board

responsible for managing the supply of money in the economy

progressive taxation

involves the wealthier members of society paying a higher portion of their incomes as taxes

flat tax

all earners pay the same rate

regressive taxation

poorer persons pay the larger share of their income

tax incidence

refers to who pays the tax

price setting

involving an outside source, like a government, to establish a price ceiling or floor on an industry with limited competition

entry restrictions

barriers like franchises, certificates of need, and license fees that help regulate the economy

barrier to entry 

a type of entry restriction that serves as a form of economic protection for a trade.

ex) physicians need to be certified by examiners

supply-side

the economic approach that calls for tax cuts in times of recession

trickle-down economics

the economic approach that favors tax cuts in times of recession, inferring that the wealthy’s added money will translate to more money circulating through the economy and to poorer earners.

laffer curve

a graph that shows that tax cuts can lead to an increase in tax collections

tax deductions

a provision that reduces taxable income

tax expenditures

tax deductions are sometimes called ____, for the government is essentially giving money back to individuals who meet the criteria and claim the credits. 

veil of ignorance

john rawl’s term for an imaginary world in which people are born in an original position disregarding their intelligence, not knowing the circumstances into which they were born. 

income inequality

the extent of the difference in total earnings between the highest income people in an area, say the top 5 percent, and those with the lowest incomes, say the lowest 30 percent.

redistribution

involves taking from the people who have income and giving to the people who do not have enough income.

cash transfer

social security and temporary assistance for needy families are ________ programs in which eligible persons recieve checks each month.

social security

a social insurance program that takes in money from workers and pays out money to retirees, with specific pay-outs determined by a number of factors, including, but not limited to, the number of years one has worked, how much one made during those years, when one retires, and marital status.

social insurance

a type of insurance which operates on the principles that 1) some individuals may not be able to provide adequately for themselves, and 2) a majority in society believe it is better for all in society if those who cannot provide fr themselves recieve some assistance.

redistributive

governmental actions aimed at reallocating resources and wealth from one segment of society to another, often with the goal of reducing economic inequality and providing support for disadvantaged groups.

means tested

involves officials determining whether persons have income low enough to qualify for benefits.

block grant

an annual sum of money that is awarded by the federal government to a state or local government body to help fund a specific project or program such as Medicaid, public housing, education, and job training

categorical grant

federal funds provided to state or local governments for specific purposes, often with strict regulations on how the money can be spent.

earned income tax credit

a form of “negative income tax” in which people are given tax credits as an inducement to work.

minimum wage

established by the national government in the Fair Labor Standards Act of 1937; states and cities may set wages higher than the federal amount.

recession

a significant and widespread decline in economic activity that lasts for more than a few months