AP Gov - Ch. 17, 18, 19 "What About"s
Terms in this set (49)
A mixed economy
The US is economic system is a mixed free-enterprise system characterized by private ownership of property, private enterprise, and marketplace competition. The fed. gov't. plays important role in fostering economic development with taxes, tariffs, public lands disposal, public works policies, and the national bank.
US economic system. Goods and services are privately owned, not owned by the government. Investments are made by private decision. Prices, production, and distribution of goods determined by free market competition.
Domestic issues (abortion, immigration, gun rights, etc.), size of government and its influence (wish to decrease its size and influence in economy, etc.), regulations (too many restrictions harms the idea of a free market), social welfare (people on the system abuse it, issue of welfare recipients starting families), our involvement in foreign affairs
Laissez-Faire Economic Theory
"Hands-off" governmental policy; no involvement or regulation of federal government. Based on idea that gov't involvement is wrong.
Form of gov't regulation in which the nation's money supply & interest rates are controlled.
Monetary Policy Tools
1. Discount Rate - interest rate at which member banks borrow money from the Federal Reserve
2. Reserve Requirements - gov't requirements that a portion of member banks' deposits must meet to back loans made (increase/decrease money supply)
3. Open Market Operations - buying and selling US bonds
Setup of the Federal Reserve System
Federal Reserve Board (FRB), 7 member board, sets reserve requirements, controls the discount rate, and makes other economic decisions. Responsible for changing the money supply.
Current FRB Chairman
Shift in Government Involvement since New Deal
"New Deal established legitimacy & viability of national gov't intervention in the economy." (pg. 659) Passive government replaced with active government, lasting effects on spending and regulation.
Social Regulation Era - after New Deal, national gov't passed social regulatory legislation on multiple issues, time of social activism (60's & 70's).
Deregulation - after Social Regulation Era, reduction in market controls with intent of increased market competition, high priority for Carter administration & important for Ford administration and Sen. Ted Kennedy, still controversial today
Fed. government's policies on taxes, spending, & debt management. Intent of promoting macroeconomic goals, with respect to employment, price stability, and growth.
Keynesian Economic Theory
(John Maynard Keynes) Deficit spending could supplement the total or accumulate demand for goods & services. Gov't spending would offset decline in private spending & maintain high levels of spending, production, and employment.
Sherman Antitrust Act of 1890
Prohibits all restraints of trade, such as price-fixing, bid-rigging, and market allocation agreements, and prohibits all attempts at monopolization by one or groups of companies.
National Labor Relations Act of 1935 (Wagner Act)
Guaranteed workers' rights to organize and bargain collectively through unions of their own choosing.
Social Welfare Policies
Gov't programs designed to improve quality of life. Income Security Programs - made to protect people against loss of income due to retirement, disability, unemployment, or deal or absence of family breadwinner. Made up of means-tested and non-means-based programs.
Income security programs to which all those meeting eligibility criteria are entitled. Non-means tested (benefits provided regardless of income or means of recipients).
Programs intended to assist those whose incomes fall below a certain level.
Expense of Social Security & Medicare
Very costly. The book has information from 2003 saying that we spend $438 billion on Medicare and Medicaid and $470 billion on Social Security, and the expenditures are "projected to increase." They have by about 35-40%.
Recipients of Medicare
All Americans at age 65 automatically get Part A Medicare benefits, Part B is optional and covers all that is not covered in Part A.
Criticisms of Current Welfare System
People that get on the system tend to abuse it, issue of recipients starting families & funding for child, system made with no intent of getting people off of it
Social Security Act of 1935
Established old-age insurance (Social Security) and assistance for the needy, children, and others, and unemployment insurance.
"War on Poverty"
A part of LBJ's Great Society legislation that intended to reduce the problem of poverty. Used expansion of fed. gov't's power to try and combat poverty; healthcare (Medicare & Medicaid) & civil rights also important part of Great Society
Level and Cost of our Healthcare
Over $10 billion spent annually on biomedical research (through NHI institutes & centers).
National Institutes of Health
Agency of US Dept. of Health through which the fed. gov't finances and conducts the medical research.
Basics of Medicaid
Expansion of Medicare that subsidizes medical care for the poor. Provides comprehensive health care, including hospitalization, physician services, prescription drugs, and long-term nursing home care to all who qualify. Jointly financed by national and state gov'ts.
Cost of Prescription Drugs
With Medicaid, there was a program enacted where 75% of the drug cost is paid for when people pay a $35 monthly premium with $250 deductible, and 95% of the drug cost is paid for if annual drug costs exceed $5,100.
In general, prescription drugs are very costly, and this program subdues the cost a bit.
Clean Air Act & EPA
Clean Air Act - Directs the EPA, to set standards for motor vehicle emissions, air quality, hazardous pollutants, and new sources of pollution; to prevent significant deterioration of air quality in clean air areas; to reduce stratospheric ozone depletion; and to control acid rain through an emissions trading system.
EPA - Established in 1970 to take charge of these environmental programs. Nation's largest regulatory agency.
Creation of United Nations
Created after WWII to guarantee the security of nations and to promote global economic, physical, and social well-being.
NATO & its Purpose
North Atlantic Treaty Organization; first peacetime treaty that the US entered, a regional political and military organization created in 1950.
Purpose of the State Department
Formulation and implementation of US foreign policy.
Role of the Secretary of State
Dealing with foreign affairs.
Department of Defense Headquarters.
National Security Council
Executive agency responsible for advising the president about foreign and defense policy and events.
Executive agency responsible for collection and analysis of information and intelligence about foreign countries and events.
End of Isolationism
WWII; Pearl Harbor attack transformed American society and broke the isolationist standpoint.
The Cold War
US vs. Soviet Union. Capitalism vs. Communism. Nuclear arms race. Strategy of containment used, US provided assistance to countries fighting communist revolutions.
Early Failures in Vietnam (LBJ)
LBJ blamed for US involvement, War on Poverty lost, LBJ not getting credit for his successes.
Foreign Policy Powers of Congress
Regulation of foreign commerce
Power to declare war
James Monroe's 1823 pledge that the US would oppose attempts by European states to extend their political control into the Western Hemisphere.
European Recovery Program; extensive US aid to Western Europe after WWII
Strategy to oppose expansion of Soviet power, particularly in Western Europe and East Asia, with military power, economic assistance, and political activity.
Results of the Cold War
NATO created to combat the Warsaw Pact, Cuban Missile Crisis and fearful public, after crisis Detente, later confrontational with Soviet Union, collapse of Soviet Union, transition from communism to democracy in Western Europe revolts.
Relaxation of tensions between the US and Soviet Union during the 1970's with the Nixon administration.
Events leading to the end of the Cold War
Economic failure and collapse of Soviet Union, transition from communism to democracy in Western Europe revolts, fall of Berlin Wall, Gorbachev & Reagan focused on improving relations
9/11 WTC attacks by members of al-Qaeda caused major shift in focus to terrorism and combating it. Bush administration declared a "War on Terror," established Dept. of Homeland Security, made the war a global undertaking.
The US currently spends more on defense than the next top 14 countries combined. During Cold War, 7% of GDP spent on defense, and we still spend about one-fifth of our total budget on defense.
Taxes on imports used to raise government revenue and to protect infant industries.
North American Free Trade Agreement. Promotes free movement of goods and services among Canada, Mexico, and the US.
Level of American Interest in Foreign Affairs
US public is (mostly) always more interested in domestic affairs than foreign and defense policy. At times of crises however, the interest of foreign affairs tends to increase drastically, such as with the Cuban Missile Crisis, 9/11, Vietnam, etc.
International Monetary Fund. International governmental organization created shortly before the end of WWII to stabilize international financial relations through fixed monetary exchange rates.
Sets exchange rates.
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