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Chapter Menu
Essential Question
Section 1: Business and Labor Policy
Section 2: Agriculture and Environment
Section 3: Health and Public Assistance
Section 4: Education, Housing, and Transportation
Chapter Summary
Essential Question
How does politics affect social and domestic policies, and how do those policies affect your economic choices, your education, and even the air you breathe?
Section 1-Content Vocabulary
Content Vocabulary
• mixed economy
• laissez-faire
• trust
• monopoly
• interlocking directorate
• oligopoly
• securities
• collective bargaining
• injunction
Section 1-Academic Vocabulary
Academic Vocabulary
• trend
• clarify
• investor
Section 1-Reading Strategy
Reading Strategy
Create a time line to take notes about when the government started regulating business.
A. A
B. B
C. C
D. D
Section 1-Polling Question
Which type of federal subsidy is most helpful to small business owners?
A B C D
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A. tax incentives
B. government loans
C. free services
D. direct cash payments for vital goods and services
Section 1
Promoting and Protecting Business
• A mixed economy is one in which the government both supports and regulates private enterprise.
• Regulating business is a relatively recent function of the federal government, but the promoting and protecting of business has been a major activity of United States government since George Washington was president.
Section 1
Promoting and Protecting Business (cont.)
• Today the federal government provides at least four types of subsidies, or forms of aid to business:
– One is tax incentives that allow businesses to deduct certain expenses from their annual tax returns.
– A second is government loans, or credit subsidies, that provide funds for businesses at low interest rates.
Section 1
Promoting and Protecting Business (cont.)
– A third type of subsidy is free services, such as weather information, census reports, and other information that is valuable to businesses across the nation.
– Finally, the government provides direct cash payments to businesses whose products or services are considered vital to the general public.
Section 1
Promoting and Protecting Business (cont.)
• A separate department of the executive branch, the Department of Commerce, was formed in 1903 for the sole purpose of promoting business interests.
• An important independent executive agency outside the Commerce Department that aids businesses is the Small Business Administration (SBA).
• In addition to offering credit subsidies, the SBA gives free advice and information to small business firms.
A. A
B. B
C. C
Section 1 – DQ1
What is the name of the independent executive agency that aids small businesses?
A. the Small Business Administration
B. the Independent Business Agency
C. the Commerce Department
A B C
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Section 1
Regulating Business
• The commerce clause in Article I, Section 8, is the main basis for government regulation of the economy.
• The Founders designed it to allow federal control of interstate commerce, eliminating a major weakness of the Articles of Confederation.
• Over the years, the Supreme Court has broadened the interpretation of interstate commerce to include a wide variety of economic activities.
Section 1
Regulating Business (cont.)
• Until the late 1800s, the federal government for the most part took a hands-off, or laissez-faire, approach to the economy.
• The Interstate Commerce Act of 1887 established the first federal regulatory agency, the Interstate Commerce Commission, and placed certain limits on the freight rates that railroad companies charged.
Section 1
• In a trust, several corporations combined their stock and allowed a board of trustees to run the corporations as one giant enterprise.
• A monopoly is a single producer that controls so much of a product, service, or industry that little or no competition exists.
• Congress’s first attempt to halt monopolies came in 1890 with the passage of the Sherman Antitrust Act.
Regulating Business (cont.)
Section 1
• In 1914 Congress passed the Clayton Antitrust Act, which prohibited charging high prices in an area where little competition existed.
• The act addressed the control of companies by outlawing interlocking directorates—a circumstance in which the same people served on the boards of directors of competing companies.
Regulating Business (cont.)
Section 1
• Today, instead of trusts and monopolies, economic power belongs to oligopolies, which exist when a few firms dominate a particular industry.
Regulating Business (cont.)
A. A
B. B
C. C
D. D
Section 1 – DQ2
A B C D
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The term that refers to the situation when a few firms dominate a particular industry is
A. monopoly.
B. duality.
C. business bloc.
D. oligopoly.
Section 1
Consumer Protection
• Congress passed the Pure Food and Drug Act in 1906 to make it illegal for a company engaged in interstate commerce to sell contaminated, unhealthful, or falsely labeled foods or drugs.
• The Food and Drug Administration is responsible for protecting the public from poorly processed and improperly labeled foods and drugs.
Section 1
Consumer Protection (cont.)
• The Federal Trade Commission protects consumers from misleading and fraudulent advertising.
• Congress created the Consumer Product Safety Commission in 1972 to protect consumers from “unreasonable risk of injury from hazardous products.”
• The Securities and Exchange Commission has regulated the trading of securities, or stocks and bonds, since its creation during the Great Depression.
A. A
B. B
C. C
Section 1 – DQ3
What organization has regulated the exchange of stocks and bonds since the Great Depression?
A. the Federal Trade Commission
B. the Federal Communications Commission
C. the Securities and Exchange Commission
A B C
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Section 1
Government and Labor
• Early unions failed to survive for very long due to resistance by employers and no support from government.
• The first successful national labor organization, the America Federation of Labor, was founded in the 1880s.
Labor Force and Union Membership
Section 1
Government and Labor (cont.)
• The practice of negotiating labor contracts is known as collective bargaining.
• The Norris-La Guardia Act of 1932 gave workers the right to join unions and strike and restricted the use of federal court injunctions—court orders to prevent an action from taking place—against labor unions.
Labor Force and Union Membership
Section 1
• In 1935 Congress passed the Wagner Act, guaranteeing the right of all workers to organize and bargain collectively.
• The Wagner Act created the National Labor Relations Board, which had the power to supervise elections to determine which union a group of workers wanted to represent it.
Labor Force and Union Membership
Government and Labor (cont.)
Section 1
• In 1947 Congress passed the Taft-Hartley Act, the government’s first attempt to regulate certain practices of large unions.
• The Landrum-Griffin Act of 1959 made it a federal crime to misuse union funds and also protected union members from being intimidated by union officials.
Labor Force and Union Membership
Government and Labor (cont.)
A. A
B. B
C. C
Section 1 – DQ4
The practice of negotiating labor contracts is known as
A. bartering.
B. contractual obligation.
C. collective bargaining.
A B C
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Section 2-Content Vocabulary
Content Vocabulary
• price supports
• acreage allotment
• marketing quotas
Section 2-Academic Vocabulary
Academic Vocabulary
• output
• restore
• environmental
Section 2-Reading Strategy
Reading Strategy
As you read, create a graphic organizer that shows the three major ways the Department of Agriculture helps farmers.
A. A
B. B
C. C
Section 2-Polling Question
Which of these should demand highest priority from the federal government?
A. aid to farmers and agriculture
B. environmental protection
C. energy conservation
A B C
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Section 2
Farmers and Government
• Despite being a largely urban nation, the federal government continues to support American agriculture because farming is vital to the nation.
• In 1862 Congress passed three acts that were important to farmers:
– One law created the Department of Agriculture, whose original purpose was to show farmers how to improve and modernize their agricultural methods.
Section 2
Farmers and Government (cont.)
– The Morrill Act aided northern states by granting them millions of acres in federal land to set up state-operated colleges of agriculture.
– The Homestead Act gave land to those who were willing to farm it.
• President Roosevelt’s New Deal programs set out to raise the price of farm products by limiting the production of certain crops that were in oversupply.
Section 2
• Under the Agricultural Adjustment Act, the government paid farmers for not producing their usual amount of corn, wheat, hogs, and other commodities.
Farming in the United States
Farmers and Government (cont.)
A. A
B. B
C. C
D. D
Section 2 – DQ1
A B C D
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What act paid farmers for not producing their usual amount of corn, wheat, hogs, and other commodities?
A. the Agricultural Surplus Act
B. the Curbed Agriculture Act
C. the Agricultural Depletion Act
D. the Agricultural Adjustment Act
Section 2
Aid for Farmers Today
• The chief functions of the Department of Agriculture are to help farmers market their produce, stabilize farm prices, conserve land, and promote research in agricultural science.
• Under the program of price supports, Congress establishes a support price for a particular crop. The Commodity Credit Corporation then lends the farmer money equal to the support price for the crop.
Section 2
Aid for Farmers Today (cont.)
• The government has adopted the idea of acreage allotment, where the Department of Agriculture estimates the probable demand for a crop, estimates the number of acres that will produce that amount, and pays farmers for only the crops grown on the assigned number of acres.
• When a crop has been overproduced and large surpluses threaten to lower prices, the government turns to marketing quotas, or marketing limits.
A. A
B. B
C. C
D. D
Section 2 – DQ2
A B C D
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Who lends the farmer money equal to the support price for the crop?
A. the Commodity Credit Corporation
B. the Fed
C. the Agriculture Committee of America
D. the Farmers Aid Commission
Section 2
Protecting the Environment
• The Air Pollution Act of 1955 was limited to promoting research on air quality and to providing technical assistance to states and communities.
• The 1970 Clean Air Amendments established the Environmental Protection Agency, giving the federal government power to enforce air-quality standards.
• The 1990 Clean Air Act mandated reductions in emissions.
Section 2
Protecting the Environment (cont.)
• The Water Quality Improvement Act of 1970 prohibited the discharge of harmful amounts of oil and other dangerous materials into navigable waters.
A. A
B. B
C. C
D. D
Section 2 – DQ3
A B C D
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Which act prohibited the discharge of harmful amounts of oil and other dangerous materials into navigable waters?
A. the Air Pollution Act
B. the Water Quality Improvement Act
C. the Clean Air Act
D. the Water Purity Act
Section 2
Energy and the Environment
• As the government fashioned a new energy policy in the mid-1970s to meet future energy crises, people began to recognize the costs of a cleaner environment, and conflicts among interest groups with different goals ensued.
Section 2
Energy and the Environment (cont.)
• The usual policy fights between environmentalists and business groups have intensified recently for several reasons.
– First, there is a fear that terrorists or unfriendly governments might restrict access to Middle Eastern oil.
– Second, many people now worry that Americans’ high consumption of oil contributes to global warming.
A. A
B. B
C. C
Section 2 – DQ4
Which of the following is the belief of environmentalists?
A. the cost of a cleaner environment outweighs the benefits
B. terrorists or unfriendly governments might restrict access to Middle Eastern oil
C. Americans’ high consumption of oil contributes to global warming A B C
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Section 3-Content Vocabulary
Content Vocabulary
• social insurance
• public assistance
• unemployment insurance
Section 3-Academic Vocabulary
Academic Vocabulary
• component
• supplement
• controversial
Section 3-Reading Strategy
Reading Strategy
Create a graphic organizer similar to the one below to list and describe the programs the government uses to protect public health.
Which type of program provided the most relief following the Great Depression?
A. A
B. B
Section 3-Polling Question
A. social insurance programs
B. public assistance programs
A B
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Section 3
The Depression’s Impact
• After the stock market crash of 1929, the American economy continued to slump badly month after month for the next several years.
• During this crisis, the federal government initiated two types of programs:
– Social insurance programs are designed to help elderly, ill, and unemployed citizens.
– Public assistance programs distribute public money to poor people.
A. A
B. B
C. C
D. D
Section 3 – DQ1
A B C D
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Following the stock market crash of 1929, the federal government initiated two types of programs. They are social insurance and
A. social security.
B. public assistance.
C. public insurance.
D. assistance assurance.
Section 3
Social Insurance Programs
• The Social Security Act and its later amendments created a social insurance system with three main components:
– The first component is Social Security, or Old Age, Survivors, and Disability Insurance.
– The second component is a health-insurance program called Medicare.
– The third component is unemployment insurance.
Section 3
Social Insurance Programs (cont.)
• Employers and employees contribute to the Social Security system equally, but self-employed persons pay both portions of their Social Security tax.
• Retirees, disabled persons, and Medicare recipients are eligible for Social Security benefits.
Comparing Governments: Social Spending
Section 3
Social Insurance Programs (cont.)
• In 1965 Congress added Medicare to the social insurance system. The basic Medicare plan pays a major share of the total hospital bills for more than 30 million senior citizens.
• The 1935 Social Security Act also set up unemployment insurance programs for people who are out of work.
Comparing Governments: Social Spending
A. A
B. B
C. C
D. D
Section 3 – DQ2
A B C D
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What act is responsible for creating unemployment insurance programs for people who are out of work?
A. the Social Security Act
B. the Unemployment Act
C. the Financial Security Act
D. the Work Program Act
Section 3
Public Assistance Programs
• Set up by Congress in 1974, Supplemental Security Income, or SSI, brought all state programs for low-income persons who are elderly, blind, or disabled under federal control.
• President Kennedy started the food stamp program by executive order in 1961 to increase the food-buying power of low-income families and to help dispose of America’s surplus agricultural production.
Section 3
Public Assistance Programs (cont.)
• Congress established the Medicaid program—designed to help pay hospital, doctor, and other medical bills for persons with low incomes—in 1965 as part of the Social Security system.
• During the Depression, a family with dependent children was eligible for assistance under the Aid to Families With Dependent Children program (AFDC) when the family’s income fell below a level set by individual states.
Section 3
Public Assistance Programs (cont.)
• The AFDC program lasted until 1996 when it was replaced by Temporary Assistance for Needy Families.
A. A
B. B
C. C
D. D
Section 3 – DQ3
A B C D
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What program is designed to help pay hospital, doctor, and other medical bills for persons with low incomes?
A. Medicare
B. Medicaid
C. AFDC
D. food stamps
Section 3
Promoting Public Health
• The Public Health Service, part of the Department of Health and Human Services, promotes citizen’s health by supporting research and health programs.
• Federal agencies, such as the Centers for Disease Control, focus on controlling the spread of infectious diseases like AIDS, flu, and tuberculosis.
Section 3
Promoting Public Health (cont.)
• The Food and Drug Administration (FDA) tests samples of food and drug products.
• The FDA has the power to ban or withdraw from distribution drugs that it finds unsafe or ineffective.
A. A
B. B
C. C
Section 3 – DQ4
What agency has the power to ban or withdraw from distribution drugs that it finds unsafe or ineffective?
A. the Federal Trade Commission
B. the Centers for Disease Control
C. the Food and Drug Administration
A B C
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Section 4-Content Vocabulary
Content Vocabulary
• urban renewal
• public housing
• mass transit
Section 4-Academic Vocabulary
Academic Vocabulary
• undertake
• decline
• subsequent
Section 4-Reading Strategy
Reading Strategy
As you read, create a table similar to the one below to list the different federal programs that promote education, housing, and transportation.
Was President George W. Bush’s No Child Left Behind program successful at closing American schools’ “achievement gap?”
A. yes
B. no A. A
B. B
Section 4-Polling Question
A B
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Section 4
Public Education Programs
• While public education remains under local control, the federal government plays an ever increasing role, providing aid to local schools in several forms.
• In 1965, Congress passed the Elementary and Secondary Education Act, which provided federal aid to most school districts.
• The G.I. bills of rights gave veterans of World War II, the Korean War, and the Vietnam War grants for college.
Section 4
Public Education Programs (cont.)
• Opponents of federal school funding say that education should be a state and local concern and worry that federal aid leads to federal control of what is taught and how it is taught.
• The goal of president George W. Bush’s No Child Left Behind legislation was to close the “achievement gap” between white and minority students, as well as between the rich and poor.
A. A
B. B
C. C
D. D
Section 4 – DQ1
A B C D
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The first general aid-to-education law was
A. the High School Supplement Act.
B. the Right to Education Act.
C. the Elementary and Secondary Education Act.
D. the Academic Excellence Act.
Section 4
Housing and Urban Programs
• After World War II, Congress passed the Housing Act of 1949 in which it declared its goal to provide “a decent home and a suitable living environment for every American family.”
• The Federal Housing Administration, a part of the Department of Housing and Urban Development, guarantees banks and other private lenders against losses on loans they make to those who want to build or buy homes.
Section 4
Housing and Urban Programs (cont.)
• In addition, the federal government sponsors two corporations, the Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac.
• To prevent the two companies from collapsing in 2008, the companies received $200 billion in government aid and were placed under the oversight of the Federal Housing Finance Agency.
Section 4
Housing and Urban Programs (cont.)
• To assist in the rebuilding of declining central cities, the federal government supports urban renewal programs.
• Cities can apply for federal aid to clear and rebuild deteriorating areas.
• Since 1937 and especially after the 1949 Housing Act, the federal government has given aid to local governments to construct and operate public housing for low-income families.
A. A
B. B
C. C
Section 4 – DQ2
What organization guarantees banks and other private lenders against losses on loans they make to those who want to build or buy homes?
A. Federal Housing Administration
B. Freddie Mac
C. Fannie Mae
A B C
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Section 4
Transportation Programs
• In 1966 Congress created the Department of Transportation to coordinate national transportation policies and programs.
• Under the Federal Road Aid Act of 1916, the federal government provided yearly grants for road building to the states and required each state to match this aid on a dollar-for-dollar basis.
Comparing Governments: National Transportation, 2005
Section 4
Transportation Programs (cont.)
• Under the Federal Aid Highway Act of 1956 and subsequent amendments, states receive billions of dollars every year to build and improve the Interstate Highway System that crisscrosses the nation.
• The Transportation Equity Act for the 21st Century, enacted in 1998, authorized $41 billion over six years to improve the national mass-transit system such as subways, high-speed rail, and bus lines.
A. A
B. B
C. C
D. D
Section 4 – DQ3
A B C D
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What act provides states with billions of dollars every year to build and improve the Interstate Highway System?
A. the Federal Road Aid Act
B. the Federal Aid Highway Act
C. the Roads and Transportation Act
D. the Mass Transit Act
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