Chapter 18 the dollar value of all the goods and services produced in a year What is the Gross Domestic Product GDP Per capita GDP value of each individuals output total GDP population Who was president when the Great Depression began Hoover fix itself What was his approach to the Depression and why did he react the way he did He didn t do anything to stop the depression because he believe that the economy would He was a classical liberal that believed strongly in laissez faire capitalism When did confidence in laissez faire government begin to decline During the Great Depression When did the idea of an active government with responsibility for the health of the economy begin to be widely accepted in the U S During the New Deal under the Roosevelt administration According to most economists what caused the Great Depression Excessive productive capacity or under consumption An unbalance between supply and demand What did John Maynard Keynes recommend to fight a recession or depression The process whereby a commodity increases in price without increasing in real value Massive government spending priming the pump What is the technical definition of a recession A drop in the GDP for 2 consecutive quarters What is inflation How is it measured in the U S Consumer Price Index CPI What is the general cause of inflation Excessive demand or Too many dollars chasing too few goods What are the specific causes of inflation Excessive wage increases A lack of productivity Excessive government spending Increase in the cost of needed imports What are ways to control inflation Raise interest rates main weapon Reduce government spending Price freeze Deregulation Free trade Increase productivity Jawboning government pressures unions to refrain from asking higher pay What are fiscal policies and who mainly controls them Economic policies that involve government spending and taxing Mainly controlled by the president and Congress What are monetary policies and who mainly controls them Economic policies that involve control of and changes in the supply of money Mainly controlled by the Federal Reserve Board What fiscal policies did Keynes advocate to fight a recession or depression Government should either spend more itself or cut taxes Deficit spending What monetary policies did he advocate for this purpose Lower interest rates Lower reserve requirements What fiscal policies did Keynes advocate to fight inflation Government should either spend less or raise taxes What monetary policies would he suggest to fight inflation Raise interest rates What is supply side economics new machinery and buildings trickle down theory What ideological group tends to support this economic approach Conservative example Reagan What is stagflation Advocates tax credits and other incentives for businesses to encourage investments in Refers to an economy with high unemployment and high inflation Inflation with a recession A soft landing Refers to an attempt to slow down an economy just enough to control inflation but not so much that it results in a recession Important terms and concepts Economic Depression a period of high unemployment and business failures a severe Aggregate Demand the money available to be spent for goods and services by long lasting downturn in a business cycle consumers businesses and government Consumer Price Index CPI system used to measure the rate of inflation that s based on about 400 items Federal Reserve System the system of banks that acts as the central bank of the United States and controls major monetary policies Deficit Financing the Keynesian technique of spending beyond government income to combat an economic slump its purpose is to inject money into the economy to stimulate aggregate demand Public Debt the accumulated sum of past government borrowing owed to lenders outside of the government Earmarks federal funds appropriated by congress for use on local projects Chapter 2 What are the main requirements for procedural democracy Universal Participation the concept that everyone in democracy should participate in Political Equality equality in political decision making one vote per person with each governmental decision making vote counted equally Majority Rule The principal basic to procedural democracy theory that the decisions of a group must reflect the preference of more than half of those participating a simple majority What is the difference between procedural and substantive democracy Substantive democracy focuses on the substance of government policies not on the procedures followed to make those democracies Is it possible to have procedural democracy but not substantive democracy Yes if a law that infringes on the rights of a minority is passes by the majority What is majoritarianism Also called classical democratic theory The government does what the majority of the people want Holds that there are about 1000 people who can be identified that actually determine Government for the people by the people Elite theory government policies Held by Marxists and other individuals on the left Oligarchy government by the few Pluralist theory Believe that it is interest groups that most influence government policies Believe that this system is reasonably democratic if there is a wide variety of interest groups so that everyone can find an interest group to promote their interests and if there is multiple access points through which interest groups can influence the government What factors make it difficult for authoritarian states to become democracies You are going from one extreme to another Chapter 10 What are some of the important functions of interest groups Serve as a link between the people and the government Help to increase political participation Publicize issues through ads and direct mailings Provide information and expertise to government What are some criticisms of interest groups They do not represent all people Often dominated by a leader or small elite Are not accountable to anyone except the membership Competition and compromise between various interest groups do not always result in coherent legislation What was Robert Michel s theory Iron Law of Oligarchy Any individual will eventually come to be dominated by a few strong individuals What is the pluralist view of interest groups as they operate in the U S Pluralists believe that it is interest groups that most influence the government and that this system is reasonably democratic as long as there is a wide variety of