AP Gov - Economics Flashcards

Terms Definitions
*Tax Reform Act
1986- closed loopholes for avoiding taxes
*Fiscal Year
Oct 1 - Sept 30, period where fed appropriations are made
*Entitlement Programs
(get cut back when economy slows) social security, medicare, vet. benefits, food stamps, money the gov owes bond investers
Progressive Tax system
tax rate increases as the income of a person increases
*Monetarism
gov should have a steady increase of money proportional to to the growth in economic activity, otherwise free market
*Keynes
Task of gov is to create the right level of demand > would lower taxes and create new jobs through the gov (Fiscal Policy)
Price and Wage Controls
during inflation times the gov should reg the prices and wages in large industries
Inflation
occurs when too much money is chasing too little goods
supply-side theory
less gov interference in economy, tax cuts increase motivation to work
*Reaganomics
combo of monetarism, supply-side tax cuts, and domestic budget cuts > cut taxes for the rich and degregulate corporations
*Freidman
monetarist, control inflation and circulated money > decrease money supply and lower intrest rates (Lazze Faire)
*Galbraith
a major advocate for economic planning and price and wage control,if major industries are in good shape so is the economy > gov take over auto, banks, etc. (socialist)
Fiscal Policy
use of taxes and expendatures to control the economy
Budget Deficit
gov spends more than it takes in, pumping money into the economy
Budget Surplus
gov takes in more money than it spends, drainging money form the economy
Monetary Policy
control over the circulation of money and intrest rates to control the economy
the Fed
central bank, regulates the supply of money and sets intest rates
OMB
Office of Management and Budget - advises prez on budget and estimates the ammount that will be spent by fed agencies
Budget Resolution
proposes a total budget ceiling and a ceiling for several spending areas
Congressional Budget Act
1971- controversial process used by Reagan to cut fed spending
Graham-Rudman Act
(Balanced Budget) cap on spending where the budget would be automatically cut until the fed deficit appeared
16th Ammendment
congress has the power to lay and collect taxes on income (every citizen must pay)
Recession
a general slowdown in ecnomnic activity over a sustained period of time
*Economic Indicators
unemployment rate, GDP, value of the dollar, Stock Market Values, residential sales, etc.
*Obama's Plan
tax cuts for working families, invest in renewable energy thus creating new jobs, mandate accurate loan disclosure, prohibit intrest on credit card fees, etc.
Economic Policy
effort to control dramatic ups and downs in the economy to ensure gradual growth
Democrats- Wealthy Tax Rate
Clinton - 39%
Republicans- Wealthy Tax Rate
HW Bush- 31 % GW Bush 35%
FDIC
Federal Deposite Insurance Corporation - garuntees deposites up to a ceratain amt.
FTC
Fed Trade Commission - regulates monopolies
SEC
Securities and Exchange Commission- Reg. stock market and corp.s
OMB
Office of Management and Budget- help prez create budget
CBO
Congressional Budget Office - congress' check on the budget
Balanced Budget
Revenue = Expendatures
*"Bad" Inflation
prices go up too fast, throwing things off
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