Chapter 18 – Economic Policy

1. / Fiscal policy / 9. / Milton Friedman / 17. / Arthur Laffer
2. / Budget deficit / 10. / Inflation / 18. / Reaganomics
3. / budget surplus / 11. / Recession / 19. / Adam Smith
4. / Monetary policy / 12. / Keynesianism / 20. / Federal Reserve
5. / Fiscal Year (FY) / 13. / John Maynard Keynes / 21. / Scarcity
6. / Council of Economic Advisers (CEA) / 14. / Economic planning / 22. / Substitutability
7. / North American Free Trade Agreement (NAFTA) / 15. / Price and wage controls / 23. / Opportunity costs
8. / Monetarism / 16. / Supply-side theory / 24. / Debt Ceiling

Questions on Chapter 18– Economic Policy

(Plus your review book)

1. / Summarize how economics affects politics and how politicians respond.
2. / How do two kinds of majoritarian (when almost everyone benefits from a policy and almost everyone pays for it) politics complicate the politics of taxing and spending?
3. / Summarize the following economic theories: Monetarism, Keynesianism, economic planning, supply-side. Use both the book and the handout.
4. / Define fiscal policy, budget deficit, monetary policy, and fiscal year. These are important terms so be sure that you understand them and don’t just mindlessly copy them.
5. / Summarize the role of the CEA, OMB and secretary of the treasury. Use both the book and your handout
6. / What are the two sides of the debate on free trade, as explained on pp. 503-504?
7. / How did the Congressional Budget Act of 1974 (p. 505) change the budget process? In your answer indicate how the budget process is supposed to work.
8. / What are entitlements? What impact do they have on the federal budget?
9. / What was in the Gramm-Rudman Act or Balanced Budget Act of 1985? Define sequester. What strategy was adopted when sequestration didn’t work? (p. 505-506)
10. / Using the book, the handout and your own words, define gross domestic product, recession, fiscal policy, discretionary spending, and mandatory spending. Don’t just copy, but try to put your definitions into your own words.
11. / Define tax loopholes, progressive tax, regressive tax, flat tax, capital-gains tax (from book and handout)
12. / What was in the Tax Reform Act of 1986? (from handout)

Handout on Welfare and Education Policy

1. / What is the difference between social insurance programs and public assistance plans? What is the difference in how eligibility is determined for each. List the various programs that fall into each category.
2. / How was welfare reformed by the 1996 Welfare Reform Act? How Was AFDC different from TANF?
3. / What is a means test?
4. / What are the issues involved in the debate over education policy?
Chapter 20 : Foreign and Military Policy
1. / Be sure that you understand how the roles of the President and Congress change according to what type of foreign policy issue is involved.
2. / On pp 537-542, the book talks about the extent and limits of presidential power. This should be a review to you from the unit on the Presidency. Make sure you remember all this. Outline briefly the powers that the president has in foreign policy plus the checks on presidential power. Be sure to understand the limits of those checks.
3. / What are the limits on the ability of the Secretary of State to direct foreign policy? You should be familiar with all the actors in making foreign policy.
4. / What is the role of the NSC?
5. / Summarize the information about the interplay of public opinion and foreign policy. What is the “rally around the flag” effect? What differences are there between mass and elite opinion?
6. / As you read over p. 546 – 549, think about which of these descriptions of worldviews is closest to yours and where you stand with the table on p. 549. How has public opinion become more polarized on foreign policy?
7. / What does the phrase “the military-industrial complex” refer to?
8. / What factors influence the growth or decline of the defense budget?
9. / The book discusses three areas of contention regarding personnel that we’ve experienced in the past 40 years: the draft, women and gays in the military. Be familiar with these issues.
10. / What are the five explanations the book gives for cost overruns on big-ticket items in the defense budget? What is the explanation for expensive small-ticket items?
11. / Why was readiness given the lowest priority in budgeting?
12. / What solution did Congress adopt for base closings? What lessons might there be about how Congress operates and the BRAC?
13. / What is the structure of the command in the Department of Defense? The book talks about the 1986 reorganization, the Goldwater-Nichols Act and how it reorganized the Joint Chiefs of Staff. Summarize that information.
14. / Be familiar with the political debates over how to deal with terrorism.

Chapter 21: Environmental Policy

1. / Why is environmental policy so controversial?
2. / The book gives examples of how environmental issues illustrate all four styles of policy-making. From p. 566-573, skim the book and note down how environmental politics represents entrepreneurial, majoritarian, interest group, and client politics. I’m interested in your understanding the interplay of different forces on policy-making rather than on your knowing the specifics of environmental policy over the decades. I also want you to understand how the perceived costs of a policy impact public acceptance of that policy.