AP US Government & Politics Governmentby the Peoplename:______Block:____

AP US Government & Politics – Governmentby the PeopleName:______Block:____

Chapter 16: Making Economic Policy(Unit 5/4a&b)

1. Do you think the government should have any involvement in the economy at all beyond supplying money and taxing the public for public goods (military, roads, parks, schools, etc.)? Why?

1. What is fiscal policy? Who makes it?

1. What is monetary policy? Who makes it?

1. What is the “business cycle” and how does the government work to smooth out the peaks and troughs in it?

1. What is the difference between a “recession” and a “depression”?

1. What is inflation? How does it differ from the rise in price of just one product?

1. What is unemployment? Is it possible or desirable to have 100% employment?

1. What are the major components of the Consumer Price Index (CPI)? Should it include the price of higher education?

1. Do you have any concerns about the huge differences between the richest and poorest people in the USA (as measured by income or wealth)? Is it the business of the government to address this?

1. What is the Gross Domestic Product (GDP)? Do you think it is possible to accurately measure this?

1. There are an enormous amount of terms to know on pages 512-514. Learn them. Also be familiar with the pie graphs on 512-513.

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1. excise tax-
2. tariff-
3. budget deficit-
4. national debt-
5. progressive tax-
6. regressive tax-
7. mandatory spending-
8. discretionary spending-
9. Office of Management and Budget (OMB)-
10. Congressional Budget Office (CBO)-
11. tax expenditure-
12. sales tax-
13. value-added tax (VAT)-

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1. What is your opinion of tax expenditures (also called tax breaks or subsidies)? Should we lower the tax rate and eliminate them or do they give incentives to people and companies to do positive things for the country?

1. What is the Federal Reserve System? Do you think the USA should have a federal reserve system?

1. What is the federal funds rate and why is it so important?

1. What is laissez-faire economics?

1. What is Keynesian economics?

1. Which seems more reasonable to you, laissez-faire or Keynesian?

1. Which president, since 1970, had several years of budget surpluses?
2. Why do you think the US government subsidizes agriculture at a rate of 20 billion dollars in 2012? Should it continue to do that?

1. What is the trade deficit and does it matter?

1. Should the US government have policies that protect industry (tariffs to protect jobs and profits) but may harm consumers (higher prices)?

1. What is the World Trade Organization(WTO)? Do you think it should exist?

1. What is the North American Free Trade Agreement(NAFTA) and should the USA be a part of it?

1. Adam Smith, the philosophical father of free market economics, thought it was the job of the government to break up monopolies, trusts, and anything else that limits competition. Do you think the government does this effectively?

1. What do you think a “monopsony” is (not in your book)?

1. On page 525 the text has four points about how the federal government regulates labor. Do you think all of these are necessary?

1. What did the 1947 “Taft-Hartley Act” do? Do you agree with it?
2. Do you think union membership will continue to decline in the USA and, in your opinion, is that a good or bad thing?

1. Do you think the federal government should regulate banks and the stock market more, the same, or less than it currently does? (We will talk about this - the text is nearly silent on the subject).

1. What are environmental impact statements? Do you think they are a good idea or do they slow or stop necessary infrastructure projects (dams, bridges, power plants, etc.)?

1. Do corporations have a social responsibility or is their responsibility only to their shareholders?

1. The federal government moved toward deregulation in the late 1970s due to compliance costs and a feeling that the regulations were inefficient and were restricting economic growth. Do you think that was a good idea?

1. The federal government deregulated the telecom industry (not mentioned by the text), the aviation industry and the banking industry. Are you happy with the outcomes of these changes?

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