Economic Policymaking

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Chapter 17 2-18-10

Capitalism

An economic system in which individuals and corporations, not the government, own the principal means of production and seek profits

Mixed Economy

An economic system in which the government is deeply involved in economic decisions through its role as regulator, consumer, subsidizer, taxer, employer, and borrower

Multinational Corporations

Businesses with vast holdings in many countries, many of which have annual budgets exceeding that of many foreign governments

Securities and Exchange Commission

The federal agency created during the New Deal that regulates stock fraud

Minimum Wage

The legal minimum hourly wage for large employers

Labor Union

An organization of workers intended to engage in collective bargaining

Collective Bargaining

Negotiations between representatives of labor unions and management to determine pay and acceptable working conditions

Unemployment Rate

As measured by the Bureau of Labor Statistics, the proportion of the labor force actively seeking work but unable to find jobs

Inflation

The rise in prices for consumer goods

Consumer Price Index

The key measure of inflation that relates the rise in prices over time

Laissez-Faire

The principle that government should not meddle in the economy

Monetary Policy

Based on the monetarism, monetary policy is the manipulation of the supply of money in private hands by which the government can control the economy

Monetarism

An economic theory holding that the supply of money is the key to a nation's economic health; monetarists believe that too much cash and credit in circulation produces inflation

Federal Reserve System

The main instrument for making monetary policy in the United states; it was created by Congress in 1913 to regulate the lending practices of banks and thus the money supply

Fiscal Policy

The policy that describes the impact of the federal budget- taxes, spending, and borrowing- on the economy; fiscal policy is almost entirely determined by Congress and the president, who are the budget makers

Keynesian Economic Theory

The theory emphasizing that government spending and deficits can help the economy weather its normal ups and downs

Supply-Side Economics

An economic theory advocated by President Reagan holding that too much income goes to taxes so that too little money is available for purchasing and that the solution is to cut taxes and return purchasing power to consumers

Protectionism

Economic policy of shielding an economy from imports

Antitrust Policy

A policy designed to ensure competition and prevent monopoly, which is the control of a market by one company

Food and Drug Administration

The federal agency formed in 1913 and assigned the task of approving all food products and drugs sold in the United States

National Labor Relations Act

A 1935 law, also known as the Wagner Act, that guarantees workers the right of collective bargaining, sets down rules to protect unions and organizers, and created the National Labor Relations Board to regulate labor-management relations

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