Economics and Trade Policy

Discretionary Spending

• Programs that require annual authorization are part of discretionary spending.

Trade Barriers

• Protectionists argue that trade barriers prevent a nation from becoming too dependent on other countries.
• Tariffs and quotas reduce trade deficits, increase prices consumers pay, and protect domestic industry.

Wage Rates

• Regional differences in wage rates are influenced by the cost of living, labor mobility, and location.
• The traditional theory of wage determination holds that differences in wage rates can be explained by supply and demand.

Unions

• Right-to-work laws prohibit mandatory union membership.
• Unions use methods such as boycotts, picketing, and strikes.
• Unions are important in today's economy because they played a major role in promoting legislation and affecting wages today.

Economics Concepts

• The branch of economics that examines the choices of individuals concerning one product, one firm, or one industry is microeconomics.
• Scarcity occurs because people’s wants and needs are unlimited, while the resources needed to produce goods and services to meet these wants and needs are limited.
• The change in the mix of goods purchased as a result of increasing or decreasing relative prices is known as the substitution effect.

Government Spending

• Spending authorized by law that continues without the need for annual approvals of Congress is called mandatory spending.
• Spending in excess of revenues collected is called deficit spending.
• Trust funds are accounts used to fund types of expenditures.

International Trade

• The foreign exchange rate is the price of one country's currency in terms of another country's currency.
• The international agency that administers trade agreements and settles trade disputes is the WTO.

Labor Relations

• The National Labor Relations Board was created by the Wagner Act.
• The theory of negotiated wages states that differences in wage rates are determined by collective bargaining.

Economy

• The economic system is the combination of social and individual decision-making a society uses to answer the three economic questions.
• Social benefits are the benefits received by a society from a social choice.

Budget and Appropriations

• An act of Congress that allows federal agencies to spend money for specific purposes is an appropriations bill.
• Annual plan outlining proposed revenues and expenditures for the coming year is defined as the federal budget.
• A balanced budget amendment is a constitutional amendment requiring that annual spending not exceed revenues.