The purpose of this chapter is to introduce you to an area of public policy that affects everyone in one way or another: economic policy. The chapter covers both the divided attitudes that voters have toward a "good" economy and the competing theories that economists offer on how to obtain a good economy. The various agencies that participate in formulating government economic policy are reviewed, along with the many stages of producing and implementing the annual federal budget. Finally, the controversial areas of government spending and tax reform are discussed. After reading and reviewing the material in this chapter, you should be able to do each of the following:

1. Show how voters have contradictory attitudes regarding their own and others' economic benefits.
   
   
2. List and briefly explain the four competing economic theories discussed in the chapter.
   
   
3. Assess the nature and effect of Reaganomics.
   
   
4. List the four major federal government agencies involved in setting economic policy, and explain the role of each.
   
   
5. Analyze federal fiscal policy in terms of the text's four categories of politics.
   
   
6. Trace the history of federal government budgeting practices up to the present day.
   
   
7. Comment on the prospects and the desirability of lowering federal spending and reforming the income tax.