Government Policies Test Name: ____________________________________________

Public policy- the broad strategy government uses to do its job, the relatively stable set of purposive

governmental behaviors that address matters of concern to some part of society

Regulatory policy- a policy that regulates companies and organizations in a way that protects the public

Progressive tax- a tax that tends to increase the effective tax rate as the wealth or income of the
taxpayer increases

Regressive tax- a tax applied at a lower overall rate as individuals’ income rises

Laissez faire - an economic policy that assumes the key to economic growth and development is for the

government to allow private markets to operate efficiently without interference

Budget deficit- the annual amount by which expenditures are greater than revenues

Budget surplus- when income exceeds expenditures

Balanced budget- a situation in financial planning or the budgeting process where total expected
revenues are equal to total planned spending

What are the seven types of federal revenue?

1. Individual income tax

2. Corporate taxes
3. Social insurance taxes
4. Medicare tax
5. Excise taxes
6. Estate and gift taxes
7. Custom Duties
Explain Mandatory Spending vs. Discretionary Spending. What is the issues with these as it relates to the
federal budget process?

Mandatory spending is spending that guarantees a specific level of benefits to persons who meet
requirements set by law. It has the largest portion of uncontrollable spending in the federal budget with
entitlements.

Discretionary spending is spending that is not required by law. Such as defense, education, agriculture,
and grants. Just defense takes up 20% of the federal budget

List the steps on how the federal budget is finalized. (From president’s recommendation to
implementation in that fiscal year)

1. Federal agencies submit budgets for review.

2. President submits budget request to congress.
3. House review & budget resolution/Senate review & budget resolution.
4. Conference committee budget resolution.
5. 12 House Appropriations subcommittee markups & votes/12 Senate Appropriations
subcommittee markups & votes.
6. House Appropriations Committee markup/Senate Appropriations Committee markup.
7. House floor vote/Senate floor vote.
8. Conference Committee.
9. President vetoes or signs into law.

Analyze the different foreign policies that the United States has used over time. 1. Isolationism 2.
Containment 3. Internationalism

 Isolationism – where a country stays out of foreign entanglements and keeps to itself, was a
popular stance in U.S. foreign policy
 Containment – the U.S. foreign policy goal of limiting the spread of communism.
 Internationalism – advocates a foreign policy approach in which the United States becomes
proactively engaged in world affairs. Its adherents assume that liberal democracies must take
the lead in creating a peaceful world by cooperating as a community of nations and creating
effective world structures such as the United Nations.

Examine the economic policies on how 1% of our population control 99% of the wealth as well as 99% of
the population only controlling 1% of the wealth. How does this look for a capitalistic economy? What
regulations can be used to help level the playing field?

It makes capitalism look bad because the small amount of super rich people have nearly all of the wealth
and the rest of the population have less. More regulations on big businesses can make it easier for
regular people with small businesses to grow and make more money.
List the four fundamental tools for a stable economy. Define each of them and give an example how
they function within our society.

 the reserve requirement - the amount of funds that a bank holds in reserve to ensure that it is
able to meet liabilities in case of sudden withdrawals
 open market operations - the purchase and sale of securities in the open market by the Federal
Reserve
 the discount rate – the interest rate charged to commercial banks and other financial
institutions for short-term loans they take from the Federal Reserve Bank
 interest on excess reserves - Interest rate that a central bank pays to banks on funds that
exceed the statuatory reserve requirements

List the three tools to improve our economy if it is not functioning the way we want it to.

 Spending
 Tax cuts
 Interest rate changes

Who are the five players (people or organizations) that help make our foreign policy decisions?

 The Public
 The President
 Congress
 Secretary of defense
 Joint Chiefs
 National Security Council: Coordinate policy
 CIA

What is one thing the “Fed” or “Federal Reserve Bank” control? (Obviously consulting with the
president)

The Fed is responsible for conducting monetary policy and controlling the money supply. The primary
tools that the Fed uses are interest rate setting and open market operations

What are the three models of bureaucracy? What does each one do?
  The Weberian Model - agencies are apolitical, hierarchically organized, and governed by formal
procedures. Furthermore, specialized bureaucrats would be better able to solve problems
through logical reasoning. Such efforts would eliminate entrenched patronage, stop problematic
decision-making by those in charge, provide a system for managing and performing repetitive
tasks that required little or no discretion, impose order and efficiency, create a clear
understanding of the service provided, reduce arbitrariness, ensure accountability, and limit
discretion
 The Acquisitive Model - This effort can sometimes take the form of merely emphasizing to
Congress the value of their bureaucratic task, but it also means the bureaucracy will attempt to
maximize its budget by depleting all its allotted resources each year.
 The Monopolistic Model - Proponents of the monopolistic model recognize the similarities
between a bureaucracy like the Internal Revenue Service (IRS) and a private monopoly like a
regional power company or internet service provider that has no competitors. Such
organizations are frequently criticized for waste, poor service, and a low level of client
responsiveness.

Explain why our Foreign Policies are so complex when it comes to deciding on how to handle
governments, terrorist groups, or natural disasters.

There are a set of steps that must be followed over a long process in order to take action.

Freedom of information act in terms of domestic policy

Provides journalists and the general public the right to request records from various federal agencies.
These agencies are required by law to release that information unless it qualifies for one of nine
exemptions. These exceptions cite sensitive issues related to national security or foreign policy, internal
personnel rules, trade secrets, violations of personnel privacy rights, law enforcement information, and
oil well data