Public Policy and Economics (Ch 14)

Question 1

economic policy

Answer 1

decisions a government makes that affect the production, distribution, and consumption of goods; the provision of services; the flow of income; and the accumulation of wealth.

Question 2

Laissez-Faire

Answer 2

French for “leave things alone” and the view, in economics, that government should not interfere in the workings of the economy.

Question 3

Socialism

Answer 3

The view in economics that economic decision making should be completely under the control of political authority.

Question 4

Recession

Answer 4

a minor and relatively short period of economic decline

Question 5

depression

Answer 5

a period of serious and sustained economic decline

Question 6

protectionism

Answer 6

opposite of free trade, belief that government should protect American business and industry by restricting the flow of foreign goods into the United States.

Question 7

Free Trade

Answer 7

belief that America’s economic interest are best served by allowing foreign producers to sell their goods without restriction in the United States.

Question 8

Outsourcing

Answer 8

establishment, by American corporations, of factories and offices in foreign countries to take advantage of cheaper labor markets.

Question 9

fiscal policy

Answer 9

government decisions about taxing and spending that affect the economic life of a nation

Question 10

monetary policy

Answer 10

government decisions about how much money should circulate in the economy, and what the cost of borrowing money, the interest rate, should be.

Question 11

Office of Management and Budget (OMB)

Answer 11

an agency in the Executive office that provides the president with budgetary information and advice and is responsible for compiling the president’s annual budget proposal to congress.

Question 12

deficit

Answer 12

an excess of government expenditures over revenues

Question 13

debt

Answer 13

the total amount of money that the national government owes to lenders such as banks, individual and foreign investors, insurance companies, and the variety of financial institutions that purchase government securities

Question 14

surplus

Answer 14

an excess of government revenues over government expenditures.

Question 15

net interest

Answer 15

charges that the government must pay to the public for the use of money borrowed to cover budget deficits and added to the interest paid to the government trust funds to create total interest costs.

Question 16

Incrementalism

Answer 16

a model of decision making that holds that new policies differ only marginally from existing policies

Question 17

mandatory programs

Answer 17

government programs, such as social security expenditures, in which spending automatically increases from one year to the next without specific annual appropriation action by congress.

Question 18

social entitlements

Answer 18

programs, such as social security and medicaid whereby eligible individuals receive benefits according to law.

Question 19

budget

Answer 19

a planned statement of expenditure that includes specific categories of spending.

Question 20

fiscal year

Answer 20

for budget and accounting purposes in the national government; a 12 month period beginning on October 1st and ending September 30th of the following calendar year.

Question 21

authorization

Answer 21

a congressional enactment that creates or continues a policy program and the agency administering it.

Question 22

appropriation

Answer 22

a congressional enactment that funds an authorized program with a specific sum of money.

Question 23

line-item veto

Answer 23

power to add an amendment to the constitution requiring a balanced budget.

Question 24

balance budget amendment

Answer 24

a constitutional mandate that would require the federal government to operate with a budget in which revenues equaled or exceeded expenditures.

Question 25

continuing resolution

Answer 25

legislative action taken by congress to allow spending to proceed at the previous years level when congress has not met the deadline for reaching agreement on appropriations for the next fiscal year.

Question 26

congressional budget and impoundment Control act of 1974

Answer 26

legislation that significantly changed congressional budget procedures by creating budget committees, establishing a budget decision time table, changing the fiscal year, placing limits on presidential impoundments, and establishing the congressional budget office.

Question 27

congressional budget office (CBO)

Answer 27

a congressional staff unit that provides congress with budgetary expertise, independent of the president’s budget staff, to help congress clarify budgetary choices.

Question 28

sequestration

Answer 28

The process through which the president makings budget cuts in government programs to meet the mandates in law requiring ceilings on specific categories of spending.

Question 29

Budget Enforcement Act of 1990

Answer 29

the legislation that fundamentally changed budget deficit reduction efforts from the focus on deficit targets contained in Gramm-Rudman-Hollings to a focus on ceilings, or caps, on specific categories on spending.

Question 30

Statutory Pay-As- You- Go Act

Answer 30

Law passed in 2010 that requires budget increases to be off set by either reductions elsewhere or increased revenues.