Econ Unit #3 Exam

Ponzi Scheme

a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

Bernie Madoff

He is the former non-executive chairman of the NASDAQ stock market and the admitted operator of a Ponzi scheme that is considered to be the largest financial fraud in U.S. history.

Charles Ponzi

solicited fund that promised returns from exchange rates

- used gullible investor's money to pay back other investors so that people quickly invested

- Ponzi scam

Bitcoin

• a type of digital currency in which encryption techniques are used to regulate the generation of units of currency

• open-source and decentralized payment system

Altcoin

Any cryptocurrency (digital money) other than Bitcoin.

Mining

process of checking and confirming transactions

Node

A computer or device that participates in the network by verifying transactions and maintaining the blockchain ledger

Block Chain

A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly

Cryptocurrency

A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds

Cryptography

study and practice of hiding and storing information

- deals with creating keys for data, so that the public cannot read that private information

Wallet

crypto wallet is a digital tool that securely stores the necessary information (like private keys) to access and manage your cryptocurrency on a blockchain

Token

a digital representation of an asset or utility that runs on an existing blockchain

Hash

a key that contains data of a message

Frictional Unemployment

workers who are temporarily unemployed or currently between jobs

- Specific type of frictional unemployment: seasonal unemployment

- includes workers who are qualified and skilled, and their skills are transferable

Structural Unemployment

workers who are unemployed because their skills have become obsolete

- Specific type of structural unemployment: technological unemployment

- these jobs will never return because workers' skills are not transferable

Cyclical Unemployment

workers who are unemployed because their jobs have been lost due to economic downturn/contraction

- these jobs will return when economic conditions improve and grow

- this type of unemployment exists when the unemployment rate is above 4-6%

Labor Force

- workers must be willing and able to work

- workers must be at least 16 years old

- workers cannot be in the military, a full time student, or retires

- workers cannot be institutionalized

Natural Rate of Unemployment

the 4-6% unemployment rate considered to be "full employment" because structural and frictional unemployment is unavoidable in any economy

Underemployment

when workers are employed but have jobs for which they are overqualified, or they work fewer hours for lesser pay then they would like

Equation to get the unemployment rate

# of unemployed / labor force

Recession

a period of economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters

Deficit spending

government spends more money than it takes in as a way to foster economic growth

- this creates a budget deficit however, the hope is the extra spending leads to more economic growth and in turn more revenue (taxes) for the government to close the gap

- ex. public works projects, welfare programs

Austerity

a set of government policies, typically involving tax increases and/or spending cuts, implemented as a way to prevent increasing the deficit

ex. cut back on welfare programs, public works, and excess spending by the government

Real wages

represent the actual purchasing power of wages, after accounting for inflation

AKA: the amount of goods and services you can buy with your earnings

- calculated by adjusting nominal wages (the actual amount earned) for the consumer price Index (CPI) or other price indices

EEC (European Economic Community)

European Economic Community, a precursor to the European Union. This organization, established in 1957, aimed to foster economic integration and cooperation among its member states, primarily through the creation of a free trade area

EU (Economic Union)

- consists of 27 countries that have voluntarily joined and agreed to abide by its rules and treaties

- single market: operates as a single market where goods, services, capital, and people can move freely between member states

GDP/Per Capita

a measure of a country's economic output per person, calculated by diving the total value of goods and services produced (GDO) by the population. It's a widely used metric to gauge a country's standard of living and economic prosperity

Satoshi Nakamoto

the developer of Bitcoin