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Capitalism

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

Mixed Economy

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

Multinational Corporations

Businesses with vast holdings in many countries

Securities and Exchange Commission (SEC)

the federal agency created during the New Deal that regulates the stock market

Minimum Wage

The legal minimum hourly wage to which most workers are entitled

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

Underemployment Rate

As measured by the Bureau of Labor Statistics, a statistic that includes, along with the unemployed discouraged workers and people who are working part-time because they cannot find full-time work

SEC

Securities and Exchange Commission

Bureau of Labor Statistics

This organization measures the unemployment and underemployment rates

Inflation

A rise in price of goods and services

Consumer Price Index

The key measure of inflation-- the change in the cost of buying a fixed basket of goods and services

Laissez-faire

The principle that government should not meddle in the economy

Monetary Policy

Government manipulation of the supply of money in private hands-- one of two important tools by which the government can attempt to steer the economy

Monetarism

An economic theory holding that the supply of money is the key to a nation's economic health, with too much cash and credit in circulation producing 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

Use of the federal budget-- taxes, spending, and borrowing-- to influence the economy; along with monetary policy; a main tool by which the government can attempt to steer the economy. It is almost entirely determined by Congress and the president

The two tools used to steer the economy

Fiscal and Monetary Policy

Keynesian Economic Theory

Named after the English economist, the theory emphasizing that the government spending and deficits can help the economy deal with its ups and downs. proponents of this theory advocate using the power of government to stimulate the economy when it is lagging (increase demand of jobs)

Supply-Side Economics

An economic theory, first applied during the Reagan administration, holding that the key task for fiscal policy is to stimulate the supply of goods as by cutting tax rates (tax cuts)

The Two Sides to the Fiscal Policy

Supply-Side Economics and Keynesian Economic Theory

Protectionism

Economic policy of shielding an economy from imports

World Trade Organization

International organization that promotes free trade

Antitrust Policy

Policy designed to ensure competition and prevent monopoly (permits the Justice Department to sue in federal court to break up companies that control too much of the market)

FDA

Food and Drug Administration

Food and Drug Administration

The federal agency formed in 1913, with broad regulatory powers over the manufacturing, contents, marketing, and labeling of foods and drugs sold in the US

National Labor Regulations Act

Guarantees workings the right of collective bargaining, sets down rules to protect unions and organizers

Wagner Act (Synonym)

National Labor Regulations act

National Labor Relations Board

Created by the National Labor Regulations Act, it's job is to regulate labor-management relations

Social Welfare Policies

Policies that provide benefits, cash, or in-kind, to individuals, based on either entitlement or means testing

Two Types of Social Welfare Policies

Entitlement Programs and Means-Tested Programs

Entitlement Programs

Government programs providing benefits to qualified individuals regardless of need (e.g. Social Security and Medicare)

Means Tested Programs

Government programs providing benefits only to individuals who qualify based on specific needs (e.g. Medicaid and Food Stamps)

Income Distribution

The way the national income is divided into "shares" ranging from the poor to the rich

Relative Deprivation

A perception by an individual that he or she is not doing well economically in comparison to others

Income

The amount of money collected between any two points in time

Wealth

the value of assets owned

Poverty Line

The income threshold below which people are considered poor, based on what a family must spend for an "austere" standard of living, traditionally set at three times the cost of a subsistence diet

Feminization of Poverty

The increasing concentration of poverty among women, especially unmarried women and their children

Progressive Tax

a tax by which the government takes a greater share of the income of the rich than of the poor-- for example, when a rich family pays 50 percent of its income in taxes, and a poor family pays 5 percent

Proportional Tax

A tax by which the government takes the same share of income from everyone, rich and poor alike

Regressive Tax

A tax in which the burden falls relatively more heavily on low income groups than on wealthy taxpayers. The opposite of a progressive tax, in which tax rates increase as income increases

EITC

Earned Income Tax Credit

Earned Income Tax Credit

A refundable federal income tax credit for low-to-moderate-income working individuals and families, even if they did not earn enough money to be required to file a tax return

Transfer Payments

Benefits given by the government directly to individuals-- either cash transfers, such as Social Security Payments, or in-kind transfers, such as food stamps and low-interest college loans

Social Security Act of 1935

Created both the Social Security program and a national assistance program for poor families, usually called Aid to Families with Dependent Children

Personal Responsibility and Work Opportunity Reconciliation Act

The welfare reform law of 1996, which implemented the Temporary Assistance for Needy Families programs

Temporary Assistance for Needy Families

Replacing Aid to Families with Dependent Children as the program for public assistance to needy families, and requires people on welfare to find work within two years and sets a lifetime maximum of five years

TANF

Temporary Assistance for Needy Families

Social Security Trust Fund

The "account" into which Social Security employee and employer contributions are "deposited" and used

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