econ

Veblen Good Goods which have an upward sloping demand curve since they are luxury goods that are desired for their high price and luxury status

Giffen Good A type of inferior good that is demanded by the poor for their low price. They have an upward sloping demand curve since when the prices of this good decreases

people choose to buy "superior" alternatives

Inferior Good A good that is low quality. When consumer income increases

people choose to buy fewer of these goods as they turn to superior alternatives

Pareto Efficiency Economic state of perfect efficiency. In this situation

one person's situation can only be improved at the expense of another person.

Kevin Hassett Chairman of the Council of Economic Advisors

Organization of Economic Cooperation and Development OECD

Moral Hazard Lack of incentive to guard against risk leads to carelessness

12 Number of Federal Reserve Banks in US

Sherman Antitrust Act Act passed in 1890 by Congress to reduce market power of large firms

Libertarianism Milton Friedman's political/economic policy where the government has almost no involvement in the the lives of citizens

European Central Bank Lender of last resort in the Eurozone

Bundling The practice of a consumer being forced to purchase another good when they want to buy just one of the goods

30 years Longest lasting bonds in US last for this long

December 2007 to June 2009 Date of the Great Recession

Dodd-Frank Act Law passed in response to the Great Repression to increase transparency of banks and reduce predatory lending

Perverse Incentives A policy that ends up having a negative effect intended for good

Adam Smith Scottish economist that came up with the idea of capitalism and wrote The Wealth of Nations

John Keynes English economist that believed that government should play a large role in the economy and wrote The General Theory of Employment

Interest

Karl Marx Father of communism that wrote The Communist Manifesto

Milton Friedman Advocated for free markets and believed that the government should deregulate the economy

and wrote A Monetary History of the United States

David Ricardo English economist that introduced the concept of comparative advantage and advocated for free trade

John Nash Invented game theory and won a nobel prize for it and wrote An Essay on Game Theory

NAFTA An agreement between US

Canada

Federal Reserve Act Act passed by Congress in 1913 to establish a central bank that would regulate the economy

World Trade Organization Organization designed to facilitate trade between countries and help negotiate and enforce trade treaties

World Bank Organization designed to reduce poverty and aid developing countries

International Monetary Fund Organization designed to stabilize exchange rates

Bretton Woods Institutions What the IMF and World Bank are collectively referred to as

Federal Trade Commission Organization established in 1914 to make sure that companies are not engaging in various scams or anti-competitive practices

Brain Drain A significant emigration of educated or talented individuals from a country

Capital Flight Occurs when assets or monetary funds rapidly flow out of a country

Pigovian tax A tax levied on a market activity that generates negative externalities

Clayton Act Legislation passed in 1914 to ban mergers and acquisitions that would form a monopoly

Wage differential Describe the difference in wages that arises to offset the nonmentary characteristics of different jobs

Autarky Economic Independence

Gini Coefficient Measurement of income distribution in a country

Laffer Curve Graph that shows the relation between taxation and government revenue

Thomas Malthus Economist who thought that population growth would outgrow food growth(People would starve to death)

Quantitative Easing Monetary policy where the central bank purchases government securities to lower interest rate

Misery Index Sum of a country's unemployment rate and inflation rate

Human Development Index Statistic of life expectancy

education

Federal Deposit Insurance Corporation Government agency that provides deposit insurance to US banks

$250

000 Maximum amount that US banks are insured per ownership category

Okun's Law Idea that states that a point increase in cyclical unemployment rate will cause real GDP to decrease by two percent

Say's Law Rule that states that production is the source of demand

Adverse Selection When either the seller or the buyer have more information about product quality than the other

Information Assymetry When one party has more or better information than the other causing an imbalance in power in transactions

Herfindahl Index Commonly accepted measure of market concentration that helps indicate the amount of competition between firms

Horizontal equity Economic theory that states people with similar income and assets should pay the same amount in taxes

Vertical equity Economic theory that states that people who can afford to pay more taxes should pay more taxes