In The Wealth of Nations (1776), Adam Smith made some arguments for
laissez-faire capitalism except that the government should not be involved in the economy whatsoever (they are needed for regulation purposes)
Which statements best describes the relationship today between government and the economy in the United States?
Government is a regulatory agency.
Regulation of the economy by the government for reasons of efficiency is justified by what?
Safety and the promotion of a more fair, competitive economy (elimination of monopolies)
The term externality refers to....
when businesses fail to pay the full cost of resources in production. (In example the cost of pollution a company creates is usually passed on as an expense to the society not the company)
A ruling by the Food and Drug Administration that a drug is dangerous to use and therefore cannot be marketed is an example of regulation for the purpose of
Government support for agriculture in the form of price supports and income subsidies is designed primarily to do what?
a. increase farm production in order to meet the nation's food needs.
b. stabilize farm income, which would otherwise fluctuate greatly due to market and weather conditions.
c. promote farm conservation so as to preserve the productive capacity of U.S. agriculture.
d. encourage rural development.
e. encourage urban development
A fiscal-policy solution to inflation would be to do what?
Raising taxes and cutting spending (they want to take money back)
The Federal Reserve controls the money supply through which actions:
Monetary policy -Control over money supply
•Raise or lower the cash reserve that member banks are required to deposit with the Federal Reserve
•Raise or lower interest rate on member banks
Monetary policy differs from fiscal policy in what ways
-Monetary policy- economic management available to government based on manipulation on the amount of money in circulation (in example changing interest rates or reserve requirements)
-Fiscal Policy deals with how the government collects and spends money. A tool of economic management by which government attempts to maintain a stable economy through its taxing and spending decisions.
The poverty line is defined as what?
The annual cost of a thrifty food budget for an urban family of four multiplied by three to include the cost of housing, clothes, and other necessities.
Which Country has the highest child poverty rate among the major industrialized nations
The United States
The largest proportion of Americans living below the poverty line are who?
Children, people in rural areas, single parent families, and minority groups
What program was terminated in 1996 and replaced by the Temporary Assistance for Needy Families (TANF) program?
Aid to Families with Dependent Children (AFDC) program
Franklin D. Roosevelt's New Deal reflected the concept of positive government, meaning what?
Intervention necessary to buffer economic and social forces beyond a person's control
The three stages of interactions between political actors that lead to the emergence and resolution of public policy issues is called the
public policy process
The U.S. social welfare system differs markedly from those of West European democracies; a situation that is attributable primarily to America's what?
America's individualism, meaning that everyone has an equality of opportunity for succeed.
The defining characteristic of a social insurance program is what?
It is restricted to people who paid special payroll taxes during their working years
What is the primary reason that the existence of Social Security greatly lessens the demand for other forms of social welfare?
The incentive of Social Security benefits upon retirement encourages individuals to work during their productive years, which reduces the need for other forms of social welfare, such as unemployment benefits.
The Aid to Families with Dependent Children (AFDC) program was unpopular because of what?
Americans linked it to welfare dependency and irresponsibility (look at page 575 for example)
The foundation for U.S. policy toward the Soviet Union after World War II was what?
___ is the current Secretary for Defense, as __ is the current Secretary of States under Obama Administration
Leon Panetta; Hilary Clinton