Term
| What does Article I say about fiscal policy? |
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Definition
| That in order to spend money it has to be authorized and appropriated. |
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Term
| What is authorization in the budget process? |
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Definition
| It sets the spending cap. |
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Term
| What is appropriations in the budget process? |
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Definition
| Spending may be less than, but not more than authorization. |
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Term
| What does the 16th amendment allow? |
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Definition
| Authorizes government to collect an income tax. |
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Term
| What was the Budget and Accounting Act of 1921? |
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Definition
| Established framework for federal budget. Required the President to submit an annual budget to Congress. |
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Term
| What was the Employment Act of 1946? |
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Definition
| Required federal government to track inflation, interest rates, unemployment, and GDP for 4 years and include that in budget consideration. |
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Term
| What theory was the Employment Act of 1946 based on? |
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Definition
| Keynesian theory that government should intervene when there is high unemployment. |
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Term
| What was the Congressional Budget and Impoundment Act of 1974? |
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Definition
| Law that governed the role of Congress in the US budget process. |
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Term
| What was the Budget Enforcement Act of 1990? |
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Definition
| Created 2 new budget control processes. 1). A set of caps on annually-appropriated spending. 2). A pay-as-you-go process for entitlements and taxes. |
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Term
| What is the Congressional Budget Office (CBO)? |
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Definition
| Legislative (Congress) agency that evaluates the effects of estimated future deficits and growing federal debt on U.S. economic growth, the flexibility of future fiscal policy, and the risk of a sudden fiscal crisis. Created by the Congressional Budget and Impoundment Act of 1974. |
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Term
| What is the Office of Budget and Management (OMB)? |
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Definition
| Executive branch agency to prepare the federal budget. Helps formulate the President's spending plans. |
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Term
Mandatory v. Discretionary Spending |
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Definition
Mandatory - Entitlements
- SS, non means tested
- SSI means tested
- Medicare non means tested
- Medicaid means tested
- Food Stamps means tested
- Veteran's Benefits some are some are not means tested
Discretionary=everything else |
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Term
| What kind of tax is S.S.? |
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Definition
|
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Term
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Definition
| No its benefits apply to all! |
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Term
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Definition
| Federal government has been borrowing from SS to offset debt. It is being paid to people who don't need it. |
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Term
| What is the US debt at now? |
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Definition
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Term
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Definition
| People who benefit from programs but don't contribute to the costs. |
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Term
| What do most people think government should do with economic policy? |
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Definition
| Tax and provide for national defense. |
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Term
| What's a common misunderstanding of Capitalism? |
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Definition
| It doesn't mean a country has a democratic form of government. Ex. China |
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Term
| What is the definition of inflation? |
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Definition
| When prices rise higher than wages. |
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Term
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Definition
| when you have two or more quarters of falling production. Production is measured in GDP. |
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Term
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Definition
| When you have a prolonged period of high unemployment. |
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Term
| What is a common goal of all Economies? |
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Definition
| Low inflation, low unemployment, higher production. |
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Term
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Definition
| Government spending and taxing. Congress and President determine fiscal policy. They Tax, Spend, and Manage Debt. |
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Term
| What is the philosophy of Keynes? |
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Definition
| Government should intervene when there is high unemployment. |
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Term
| What is the philosophy of Adam Smith? |
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Definition
| We all benefit if everybody seeks their own self-interest. Invisible hand man. |
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Term
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Definition
| Influencing the economy by manipulating the money supply done by the FED. |
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Term
| How does the FED influence the money supply? |
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Definition
| Raising/lowering interest rates, buying and selling government bonds, and manipulating the reserve requirements. |
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Term
| What are 3 prominent divisions of the FED? |
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Definition
1. Federal Reserve Board
2. Open Market Committee
3. Member Banks |
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Term
| What is US tax burden like compared to the world? |
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Definition
| US tax burden is the lowest. |
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Term
| Who do Social Welfare programs benefit? |
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Definition
| Poor, Middle Class, Upper Class. |
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Term
| Where do most subsidies go to? |
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Definition
| Upper and middle income earners. |
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Term
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Definition
| Social Insurance not welfare. |
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Term
| When were social programs started? |
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Definition
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Term
| How much is the federal budget dedicated to mandatory spending? |
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Definition
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Term
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Definition
| Creates a baseline budget, so they can compare what congress thinks is going on with the president's budget. (omb) |
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Term
| What is an example of a subsidy? |
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Definition
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Term
| Every program that is enacted has a ____. |
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Definition
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Term
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Definition
- Preparation - formulation of president's budget for the fiscal year.
- Approval - president's plan transmitted to Congress for approval.
- Appropriations - Congressional action on budget. (authorization/appropriation)
- Execution - agency program managers execute budget provided in law.
- Audit - Data on actual spending becomes available for completed fiscal year.
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Term
| What are the 3 tools of Fiscal Policy? |
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Definition
1. Taxing
2. Spending
3. Debt Management |
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Term
| What are the 3 tools of monetary policy? |
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Definition
1. reserve requirements - increase RR, then decrease money supply.
2. discount rate - (interest rates) raise rates decrease money supply.
3. Open market operations - buying and selling of government bonds. Selling bonds decreases the money supply. |
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Term
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Definition
| As long as government does not intervene, market forces will correct themselves if left alone. Invisible hand of the market. |
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Term
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Definition
Middle Class Reform Movement.
Leaders thought that society could be made better. Wanted better working conditions, more equality of treatment while maintaining profitable growth. |
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Term
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Definition
| Based on Keynesian economics. New Deal represented new part on government to invest in remedying failing markets. |
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Term
| What is an example of environmental policy having an economic trade-off? |
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Definition
| EPA was created to consolidate services for solid wastes, water, and air. |
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Term
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Definition
| An agreement that created IMF and World Bank. Nixon did away with it (took us off gold standard.) Now we have floating currency. |
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Term
| What is a Floating Currency? |
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Definition
| value of currency derived by indexing currencies to the dollar based on our economic strength relative to our trading partners. |
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Term
| What kind of Economy is USA |
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Definition
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Term
| When value of a Nation's money is low, their exports increase. |
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Definition
| China controls the value of their money artificially. |
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Term
| What is a pure capitalistic economy? |
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Definition
| prices, wages, working conditions are controlled by the market. |
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Term
| What is a socialistic economy? |
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Definition
| means of production, prices, wages etc. are controlled by the government. |
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Term
| Most economies in the world today are _____ economies. |
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Definition
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Term
| Who sets the National debt limit? |
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Definition
| Congress. When limit is reached, they vote a higher one. ting-a-ling. |
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Term
| Who holds most of US debt? |
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Definition
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Term
| The Entire cost of programs for the poor is less than tax breaks and programs and incentives designed to aid middle and upper income earners. |
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Definition
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Term
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Definition
| When you have both a trade and budget deficit. |
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Term
| Who are #1 and #2 trading partners for US? |
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Definition
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Term
| Economic Policy is controlled by. ______ |
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Definition
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Term
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Definition
| lowered wages for unskilled workers. Moved most unskilled jobs out of country. raised wages of higher skilled workers. US a tertiary provider. |
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Term
| How much international trade is goin on? |
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Definition
| 25 trillion worth of trade crosses borders each year. |
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Term
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Definition
compulsory with SS
non means tested |
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Term
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Definition
means tested
fed govt covers over half of health costs. States set their own guidelines. |
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Term
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Definition
state/federal partnership
assistance to needy children.
means tested. |
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