Transcript Who has the power to enforce laws?

What traditionally happens to
unemployment and poverty rates
during a contraction or
recession?
They rise
What is the basic definition of an
unemployed person?
someone who wishes to work but
cannot find a job
Identify three types of
unemployment.
frictional (moving from job to
job), structural (change in
technology), seasonal, &
cyclical (tied to business cycle)
How do many workers in
seasonal industries solve the
problem of seasonal
unemployment?
By migrating to areas that have
work at that time (areas in
season)
Name three of the five causes of
structural unemployment.
Development of new technology,
discovery of new resources,
changes in demand, globalization,
lack of education
Fiscal Policy is built around the
supply of public goods, such as
_____, ______, and _____.
Schools, roads, national defense,
fire/police protection, national
parks
What type of employment are
we most worried about right
now? Why?
Cyclical, because we won’t get relief
until the economy recovers
How is the unemployment rate
computed?
Total number of unemployed people
divided by total workforce (all
Americans over 16 who want to
work)
Where does the unemployment
rate hover when we are
experiencing full employment?
Between 4-6%
What does the government do to
help support unemployed workers?
How do they pay for this?
Provide unemployment benefits for
people actively looking for work;
payroll taxes paid by current
workers
What does it mean to be
underemployed? Does
underemployment increase
efficiency?
in a job that does not use all of
your skills, or gives you parttime when you want full time
In what decade did labor unions in
the US first begin to win legal rights
and recognition? What law was
behind this change?
1930s
Wagner Act
What is collective bargaining?
The negotiation between a
company’s management and
union to reach agreement on a
new contract
What are the 3 key types of
inflation?
demand-pull (aggregate demand
pulling prices up), cost-push
and quantity theory
What are the three most commonly
used statistics for measuring the
current state of the economy?
GDP, unemployment, and the CPI
(inflation)
What kind of inflation is
created by increased
production costs?
Cost-push
What theory of inflation is
based on an increase in the
money supply?
Quantity Theory
What kind of inflation is
created by greater aggregate
demand?
Demand-pull
What is the most commonly
used measure of inflation?
How is it calculated?
Consumer Price Index (CPI);
tracking the prices of a
consistent “market basket” of
goods
What is the normal range for
inflation rates? What caused the
huge jump in inflation in the late
1970s?
1-3%;
A huge jump in food and oil prices
What does the core inflation rate
measure? Why?
Inflation rate without energy & food
prices; because energy & food
prices are the most volatile
What are three of the main
effects of inflation?
decreased purchasing power,
decreased value of wages,
increased interest rates,
decreased saving, increased
production costs
What is the typical effect of low
unemployment on inflation?
Why?
Low unemployment leads to higher
wages which usually creates
inflation through higher aggregate
demand
Name three of the main causes
of poverty.
Lack of education, Location, racial
and gender discrimination,
economic shifts, shifts in family
structure
What is the poverty line?
What does the poverty rate
measure?
The minimum income needed to
satisfy basic economic needs; the
percentage of people in a nation
living under the poverty line
What does a Lorenz curve
demonstrate?
The income gap, or disparity in
wealth holdings by percentages
of the population
What type of household is
most likely to live in poverty?
Households headed by a female
single parent
The wealthiest fifth of Americans
receives roughly what
percentage of total income? The
poorest fifth?
Almost 50%; less than 5%
What are two reasons for this
income gap?
Differences in skills and education,
inheritances, field of work
What is shift is currently taking
place in the income gap?
It is getting larger, wealthiest
Americans getting richer –
everybody else getting poorer
What is the purpose of
enterprise zones?
provide tax breaks and other
incentives to encourage
investment in areas that need
revitalization
What catch phrase demonstrates
the recent efforts to reform
welfare programs?
From welfare to workfare
Name two ways that the United
States Constitution has been
amended.
2/3 Congress & ¾ State
Legislatures, 2/3 Congress & ¾
State Conventions
The process of amending the
Constitution is a great example
of ______ism. Why?
Federalism 
Because of the interaction of federal
and state
Name 3 of the 4 types of
elections, according to V.O.
Key’s theory of elections.
Critical, Deviating, Maintaining
Reinstating
What is a critical election?
Identify an example of a critical
election.
An election that marks a major shift
in party coalitions, starts a new
party era; FDR in 1932, Reagan in
1980
What is an election where things
shift away from the ongoing
trend? An election that returns to
the ongoing trend?
A deviating election
A reinstating election
What is the primary goal of
monetary policy?
To manage the economy by
manipulating the money supply
What are the three primary tools
used in carrying out monetary
policy?
Adjusting key interest rates,
adjusting reserve requirements for
banks, buying/selling government
securities
What impact would lower interest
rates have on the amount of
consumer borrowing? How should
this effect the economy?
Increase borrowing
Stimulate the economy
Who has the primary responsibility
for setting monetary policy in the
U.S.? What is the purpose of
monetary policy?
The Federal Reserve Board
(the FED)
Lessen the impact of business
cycles on the American economy
Which FED chairman was given
guru status in the 1990s? Who
is the current FED chairman?
Alan Greenspan
Ben Bernanke
Who appoints the members of the FED
governing board? Once appointed, are
they dependent or independent in terms
of political pressure?
The President
The FED operates independently
from political pressure
Through what type of policy
does the government attempt to
influence the economy by taxing
and spending?
Fiscal Policy
How do “supply-side” economists
view tax cuts? “Demand side”?
Tax cuts can be helpful in increasing
spendable income and aggregate
demand;
Demand side favors spending to
increase economic activity and
therefore gov’t revenue
The combined effect of all our
deficit spending can be
measured where?
In our national debt (now over $14
trillion)
What measure is used to
measure the size of the debt in
terms of our entire economy?
Debt as a percentage of GDP
What approximate percentage of
the of the current budget goes
to entitlements and interest on
the debt?
66% or 2/3
Why are these entitlement
programs putting increasing
pressure on the budget?
Aging baby boomers living longer
and requiring more expensive
healthcare
Roughly what percentage of the
federal budget is left after
entitlements, interest, and
defense?
17%, or 2/3
What types of governments has
the U.S. typically supported in
the Middle East? Why?
Authoritarian; as long as they were
friendly to us (esp. during Cold
War) it helped us protect Israel
and secure our supply of oil
What effect has tension with
Iran had on the global price of
oil? Why? Why is this so critical
right now
Pushed price higher b/c Iran is
threatening to cut supply
Price of oil tied to everything –
threatens to stall recovery
What statistic is the best
measure of a nation’s standard
of living and economic output?
Why?
GDP per capita
It shows productivity and wealth
per person