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Chapter 18 Vocabulary
Economic Policymaking
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9th Grade
03/01/2009

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Term
capitalism
Definition
An economic system in which individuals and corporations, not the government, own the principal means of production and seek profits
Term
mixed economy
Definition
An economic system in which the government is deeply involved in economic decisions through its role as regulator, consumer, subsidizer, taxer, employer, and borrower
Term
unemployment rate
Definition
As measured by the Bureau of Labor Statistics, the proportion of the labor force actively seeking work but unable to find jobs
Term
inflation
Definition
The rise in prices for consumer goods. Those living on fixed incomes are particularly hard hit, while people whose salary increases are tied to the CPI but whose loan rates are fixed may enjoy increased buying power.
Term
Consumer Price Index (CPI)
Definition
The key measure of inflation that relates the rise in prices over time
Term
laissez-faire
Definition
The principle that government should not meddle in the economy
Term
monetary policy
Definition
The manipulation of the supply of money in private hands by which the government can control the economy
Term
monetarism
Definition
An economic theory holding that the supply of money is the key to a nation's economic health. Too much cash and credit in circulation produces inflation
Term
Federal Reserve System
Definition
The main instrument for making monetary policy in the U.S. Created by Congress in 1913 to regulate the lending of practices of banks and thus the money supply. The seven members of its Board of Governors are appointed to 14-year terms by the president with the consent of the Senate
Term
fiscal policy
Definition
The policy that describes the impact of the federal budget-taxes, spending, and borrowing-on the economy. It is almost entirely determined by Congress and the president, who are the budget makers
Term
Prime Interest Rate
Definition
the interest rate charged by banks to their most creditworthy customers
Term
Keynesian economic theory
Definition
The theory emphasizing that government spending and deficits can help the economy weather its normal ups and downs. Proponents of this theory advocate using the power of government to stimulate the economy when it is lagging
Term
supply-side economics
Definition
An economic theory, advocated by Reagan, holding that too much income goes to taxes and too little money is available for purchasing and that the solution is to cut taxes and return purchasing power to consumers
Term
transnational corporations
Definition
Businesses with vast holdings in many countries-such as Microsoft, Coca-Cola, and McDonald's-many of which have annual budgets exceeding that of many foreign governments
Term
antitrust policy
Definition
A policy designed to ensure competition and prevent monopoly
Term
monopoly
Definition
the control of a market by one company
Term
Federal Trade Commission (FTC)
Definition
the independent regulatory agency traditionally responsible for regulating false and misleading trade practices.
Term
Food and Drug Administration (FDA)
Definition
the federal agency formed in 1913 and assigned to the task of approving all food products and drugs sold in the U.S. All drugs, with the exception of tobacco, must have FDA authorization
Term
National Labor Relations Act
Definition
A 1935 law, also known as the Wagner Act, that guaranteed 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
Term
collective bargaining
Definition
Negotiations between representatives of labor unions and management to determine acceptable working conditions
Term
Taft-Hartley Act
Definition
A 1947 law giving the president power to halt major strikes by seeking a court injunction and permitting states to forbid requirements in labor contracts forcing workers to join a union
Term
right-to-work laws
Definition
A state law forbidding requirements that workers must join a union to hold their jobs
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