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AcDec Economic
THS AcDec Economic Crunch Kit
| Question | Answer |
|---|---|
| Automatic Policy | Changes in spending that do not require direct action from policy-makers; includes welfare, unemployment benefits, and Medicaid |
| Contractionary Policy | efforts to fight inflation and curb aggregate demand; also known as tight money(for monetary policy) |
| Discount Rate | intrest rate that Fed charges banks for loans |
| Discretionary Policy | changes in spending that require direct action from policy-making; includes changes in taxation and items of government spending |
| Expansionary Policy | efforts to fight recession and stimulate aggregate demand; also known as easy money(for monetary policy) |
| Federal Funds Rate | rate of intrest charged on overnight loans between banks |
| Open Market Operations | buying and selling of government securities to influence the money supply |
| Reserve Ratio | Percent of reserves which banks must keep on hand |
| Federal Insurance Contributions Act(FICA) | Levied a payroll tax on all citizens' paychecks to fund social security and later Medicare |
| Federal Unemployment Tax Act(FUTA) | Levied a tax on employers to fund the state unemployment compensation systems |
| Medicaid | Provides health insurance for the poor |
| Medicare | Provides health insurance for the elderly |
| Social Security | Social insurance program that provides payments to the elderly and disabled |
| Temporary Assistance to needy families (TANF) | Replaced ADFC as the primary U.S. welfare program after the 1996 welfare reform act |
| Aid to Families with Dependent Children(AFDC) | It was the first federal welfare program in the U.S. |
| Thomas Gresham | Gresham's Law says that people hoard good money and spend bad money |
| John Maynard Keynes | did not believe that a free market economy could maintain full employment and growth on its own; advocated government intervention to stimulate demand during recession |
| Karl Marx | attacked the exploitative nature of free market capitalism; associated with command economies |
| David Recardo | introduced the theory of comparative advantage and supported free trade |
| Jean-Baptiste Say | Say's Law holds that "supply creates its own demand" ; prosperity can be attained by stimulating production |
| Adam Smith | His "wealth of nations" described the "invisable hand of the market"; proponent of free market capitalism |
| European Union (EU) | Created by the Maasticht Treaty in 1993; created a European common market and a common currency (the euro) |
| General Agreement on tariffs and trade (GATT) | Established codes of conduct for trade relations in 1947 with the primary goal of eliminating trade barriers; later institionalized with the WTO |
| International Monetary Fued (IMF) | Originally charged with overseeeing the Bretton Woods System of exchange rates; now provides loans to developing countries to cover commercial debts |
| North American Free Trade Agreement (NAFTA) | Created a free trade zone in 1994 linking Canada, the United States, and Mexico |
| World Bank | Provides low-cost loans for developement where private capital is unavailable; includes the IBRD and the IDA |
| World Trade Organization (WTO) | Established in 1995 during the Uruguay Round of GATT negotiations to institutionalize GATT and arbitraded trade disputes |
| bureau of labor statistics(BLS) | Calculates the Consumer Price Index and the unemployment rate |
| Federal Deposit Insurance Corperation(FDIC) | Insures deposits in member banks up to $100,000 |
| Federal Trade Commission (FTC) | The current agency that regulates business practice |
| Interstates Commerce Commission(ICC) | First regulatory agency in the U.S. operating from 1887 to 1995 |
| Securities and Exchange Commission (SEC) | Regulates trade in stock and bond |
| Sherman Antitrust Act | 1890; first government action to limit monopolies, outlawing collusive agreements that resticted competition |
| Federal Reserve Act | 1913; established the Federal Reserve |
| Clayton Antitrust Act | 1914; outlawed margers that would result in monopolies |
| National Labor Relations Act | 1935; established a social insurance program to provide funds for the elderly and disabled (social security) |
| Employment Act | 1946; set economic stability as an official goal of federal government |
| Chairman of the Board of Governors | The effective head of the Federal Reserve; appointed every four years; the current chairman is Ben Bernanke |
| Federal Open Market Committee(FOMC) | Committtee of 12 people who buy and sell government securities: the Board of governors, the president of New York District Bank, and the presidents of 4 other district banks |
| Federal Reserve Board of Governors | 7 people appointed by the president to 14 year terms; sets discount rate and reserve ratio |
| Federal Reserve District Banks | make up the Federal Reserve System; located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco |
| Production possiblities | different combinations of goods or services can be produced with the same resources |
| Production Possiblity Curve | The production of one good decreases the possible production of another good. |
| Factors of Production | land, labor, capital, and entrepreneurial resources |
| Land Resources | (natural resources) come from nature |
| Labor resources | (human capital) skills and knowledge of humans |
| Capital Resources | (real capital) or (captial goods) goods taht are produced to later be used to produce final goods and services for consumption |
| Entrepreneurial Resources | the decision making involved in using resources to produce goods and services |
| Ceteris Paribus | Latin Prase; "all other things being equal" or "all other things being held constant" |
| Positive Economics | economic analysis based on what is |
| Normative Economics | economic analysis based on what ought to be |
| Microeconomics | the study of the individual parts of the economy and the actions of individuals and firms |
| Macroeconomics | the study of the economy as a a whole and focuses on the aggregate behaviors of producers and consumers |
| Three Major Economic Systems | traditional, planning and command, market |
| Free Enterprise(Market system) | (also known as capitalism, private enterprise, or free market) economic systems in which the rights of the individual and private ownership are most highly valued |
| Command or Planned | economic system in which the a group makes economic decisions as a whole, or in which the economic desicions are made by the government in the name of the society |
| Production Possiblity Curve | The production of one good decreases the possible production of another good. |
| Factors of Production | land, labor, capital, and entrepreneurial resources |
| Land Resources | (natural resources) come from nature |
| Labor resources | (human capital) skills and knowledge of humans |
| Capital Resources | (real capital) or (captial goods) goods taht are produced to later be used to produce final goods and services for consumption |
| Entrepreneurial Resources | the decision making involved in using resources to produce goods and services |
| Ceteris Paribus | Latin Prase; "all other things being equal" or "all other things being held constant" |
| Positive Economics | economic analysis based on what is |
| Normative Economics | economic analysis based on what ought to be |
| Microeconomics | the study of the individual parts of the economy and the actions of individuals and firms |
| Macroeconomics | the study of the economy as a a whole and focuses on the aggregate behaviors of producers and consumers |
| Three Major Economic Systems | traditional, planning and command, market |
| Free Enterprise(Market system) | (also known as capitalism, private enterprise, or free market) economic systems in which the rights of the individual and private ownership are most highly valued |
| Command or Planned | economic system in which the a group makes economic decisions as a whole, or in which the economic desicions are made by the government in the name of the society |
| Traditional Economy | Third type of economic system-rarely dominant nowadays-more prevalent within lesser-developed regions, as economic decision-making in asuch areas is more often dominated by the power of tradition |
| Mercantilism | Found in Europe from the 16th through the 18th centuries; characterized by central planning, strong government control, heavy reliance on exports to build wealth in gold and silver reserves |
| Market | resources, goods, services are exchanged |
| Law of Supply | the quantity supplied is directly related to the price, based on the assumption that as the price increases, the willingness of produces to increase the quantity supplied will increase |
| Law of Demand | the quantity demanded is inversely related to the price, based on the assumption that as the price increases, there is is less willingness, because of the higher price, to purchase a good or service |
| Demand Schedule | The quantities that are demanded at each price |
| Utility | A use |
| Budget Constraint | a low income may not allow a person to demand a good or service without giving up other important wants |
| Substitutes | other goods or services that satisfy the same want |
| Complimentary Goods | are two goods for which the demand for one affects the demands for the other |
| Marginal Utility | additional utility of consumption of an additional unit of a good or service |
| Diminishing Marginal Utility | utility may decrease as more of a good is consumed |
| Inelastic Demand | a change in price may not result in any change in the quantity demanded |
| Elasticity | refers to the relationship of the change in price to the change in quantity demanded |
| Price Elasticity of Demand | the percentage of change in the quantity demanded divided by th percentage change in price |
| Cross-Price Elasticity | Involves the relationship between the demand for one product in the price of another |
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