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1. James Carville coined the phrase its about the economy stupid! What did he mean?

The economy is what truly matter in the American society 2. What is the ideological preference of Democrats v. Republicans? Democrats: favored farmers, laborers, labor unions, and religious and ethnic minorities. It also opposes unregulated business and finance, and favored progressive income tax. In addition, it advocates welfare spending programs targeted at the poor. Republicans: emphasize the role of free market and promotes personal responsibility over welfare programs. It also opposes a government-run single-payer health care system. 3. What is the difference between monetary policy and fiscal policy? Monetary policy is typically implemented by a central bank, while fiscal policy decisions are set by the national government. However, both monetary and fiscal policy may be used to influence the performance of the economy in the short run. 4. Identify the troika of the executive branch and the role they play in economic policymaking. Chairman of the Council of Economic Advisers (CEA): impartial group of experts responsible for forecasting economic trends, analyzing economic issues, and helping prepare the economic report that the present submit to Congress each year. Director of the Office of Management and Budget (OMB): prepare estimates of the amount that will be spent by federal agencies, to negotiate with other departments over the size of their budgets, and to make certain (insofar as it can) that the legislative proposals of these other departments are in accord with the presidents program. Secretary of the treasury: provides estimates of the revenue that the government can expect from existing taxes and what will be the result of changing tax law. 5. Which branch of government is the most important part of the economic policy making machinery? Why? Congress is the most important part of the economic policy making machinery because it approves all taxes and almost all expenditures. 6. What is the function of the Federal Reserve Board? Buying and selling federal government securities Regulating the amount of money that a member bank must keep in hand as reserve Changing the interest charged banks 7. What is the budget process in accordance with the Congressional Budget Act of 1974? After the president submits his budget in February, two budget committees one in the House, one in the Senate study his overall package and obtain an analysis of it from the Congressional Budget Office (CBO). Each committee then submits to its house a budget resolution that proposes a total budget ceiling and a ceiling for each of several spending areas (such as defense). Each May Congress is supposed to adopt, with some modification, these budget resolutions, intending them to be targets to guide the work of each legislative committee as it decides what should be spent in its specific appropriations bills, informing its members as it goes along whether or not the spending proposed in these bills conforms to the May budget resolution 8. What are entitlement programs? Guarantee of access to benefits based on established rights or by legislation. 9. What is the Balanced Budget Act of 1985?

They provided for automatic spending cuts (called sequesters) if the deficit exceeded a set of fixed deficit targets. 10. What is the major source of federal revenues? Individual income tax