Fiscal and Monetary Policy

Externality

A side effect of production or consumption that has consequences for people other than the producer or consumer.

Positive Externality

A benefit that affects others who are not directly involved in the production or consumption of a good or service.

Negative Externality

A cost that affects others who are not directly involved in the production or consumption of a good or service.

Public Goods

Goods and services that are nonexcludable and nonrival in consumption, meaning they are available to everyone without payment.

Private Goods

Goods and services that are excludable and rival in consumption, meaning only those who pay for them can use them.

Free-Rider Problem

A situation where individuals benefit from a public good without contributing to its cost.

Example of Positive Externality

A college student using the knowledge gained from education to help others succeed.

Example of Negative Externality

A factory producing pollution that lowers nearby property values and harms the health of residents.

Excludable

A characteristic of private goods where non-paying consumers can be prevented from using them.

Nonexcludable

A characteristic of public goods where no one can be prevented from using them.

Rival in Consumption

A characteristic of private goods where one person's usage diminishes the ability of another person to use the same good.

Nonrival in Consumption

A characteristic of public goods where one person's usage does not diminish the ability of others to use the same good.

Technology Spillover

The benefit that results when technical knowledge spreads from one company or individual to another.

Collective Bargaining

The process by which workers, represented by unions, negotiate with employers for better wages and working conditions.

Minimum Wage Laws

Legislation that sets the lowest hourly wage that can be paid to workers, potentially raising wages above equilibrium.

Bread-and-Butter Unionism

Union focus on economic issues that affect workers' daily lives such as wages, healthcare, and job security.

Taft-Hartley Act

A law passed in 1947 that restricted union power and allowed states to pass right-to-work laws.

Union Shop

A workplace that requires new employees to join the union after being hired.

Closed Shop

A workplace that only hires workers who are already union members.

Right-to-Work Laws

Legislation that makes it illegal for unions to require membership as a condition of employment.

Labor Movement

The collective organization of workers aiming to improve their conditions and rights through unions.