Economics Review Flashcards

Flashcards for reviewing key economic terms and concepts based on lecture notes.

Commodity Money

Money with value in itself, like gold or silver.

Representative Money

Money backed by something of value, like a gold certificate.

Fiat Money

Government-issued money not backed by a physical commodity, like the U.S. dollar.

M1

Most liquid forms of money: cash, coins, and checking deposits.

M2

M1 plus savings accounts, CDs, and other near-money assets.

Fractional Reserve Banking

System where banks keep a fraction of deposits and loan out the rest.

Inflation

A general increase in prices and fall in the purchasing value of money.

Deflation

A general decline in prices and increase in the value of money.

Hyperinflation

Very rapid inflation that destroys the value of currency.

Consumer Price Index (CPI)

A measure of inflation based on changes in the prices of a typical basket of goods.

The Federal Reserve

The central bank of the U.S.; controls monetary policy.

FDIC

Government insurance for bank deposits, protects up to $250,000.

Fiscal Policy

Government use of taxes and spending to influence the economy.

Stimulus Package

Government spending designed to boost the economy during a slowdown.

The New Deal

FDR’s programs to combat the Great Depression (e.g., Social Security, jobs programs).

Savings and Loans Institutions

Banks focused on home loans; many failed in the 1980s.

Silicon Valley Bank

A modern bank that collapsed in 2023 due to a liquidity crisis.

Wildcat Banking

Unregulated banking practices before the creation of the Federal Reserve.

Free Trade

Trade between countries without tariffs or restrictions.

Trade Protectionism

Policies like tariffs to protect domestic industries from foreign competition.

Imports

Goods brought into a country from abroad.

Exports

Goods sold from a country to other nations.

Trade Surplus

When a country exports more than it imports.

Trade Deficit

When a country imports more than it exports.

World Trade Organization (WTO)

Global organization that regulates international trade.

Globalization

Increasing global economic interdependence and trade.

GDP

Gross Domestic Product: total value of goods/services produced in a country.

Recession

A period of economic decline with falling GDP for two straight quarters.

Great Depression

Severe global economic downturn during the 1930s.

Consumer Confidence

How optimistic consumers feel about the economy; affects spending.

Corporation

A legal business entity owned by shareholders.

U.S. Steel

A large industrial monopoly in the early 20th century.

Standard Oil

Major oil monopoly broken up under antitrust laws.

Monopoly

Market with one seller dominating supply.

Perfect Competition

Many sellers, identical products, easy market entry.

Collusive Oligarchy

A few firms working together to control prices (illegal in U.S.).

Competitive Oligarchy

A few large firms competing in the same market.

McDonaldization

A business model focused on efficiency, predictability, and control.

Sanctions

Restrictions placed on trade for political or economic reasons.

Gold Standard

A monetary system where currency is backed by gold.

Consumer Price Index

Tracks inflation by measuring the cost of a fixed basket of goods.