ECON 200 Final Exam 3: Monopoly and Macroeconomic Policy

Comprehensive vocabulary flashcards covering antitrust regulation, monopolies, international trade, balance of payments, exchange rates, and constitutional budgeting principles from ECON 200 Final Exam 3.

Primary Tactic of a Monopoly

The restriction of output in order to exercise market power and raise prices.

Third-Degree Price Discrimination

A pricing practice where different groups of consumers are charged different prices, such as a restaurant offering students a $10\%$ discount.

Prisoner's Dilemma (Oligopoly Lesson)

A game theory framework showing that firms in an oligopoly should collude with each other if possible to maximize their collective outcome.

Interstate Commerce Clause

The constitutional authority granted to Congress to regulate commerce among the states, serving as the constitutional foundation for antitrust laws.

Sherman Act

The landmark antitrust law that makes it illegal to be a monopoly, attempt to become a monopoly, or conspire to become a monopoly in the United States.

Rule of Reason

The legal doctrine establishing that a firm has not violated antitrust laws if it achieves a monopoly solely through superior merit, product quality, or consumer preference rather than predatory behavior.

Truth in Advertising Exemption

A specific legal exemption from truth-in-advertising regulations granted to politicians.

Clayton Act

Antitrust legislation that permits the government to approve or disapprove corporate mergers and explicitly declares that human labor is not a commodity.

Network Externalities

The collective efficiencies and cost advantages gained when many users adopt the same product or software, such as lower training costs and seamless file sharing.

Major League Baseball (Antitrust Status)

A professional sports organization that holds an exemption from federal antitrust laws.

Constitutional Budget Proposal Process

There is no formal process or timeline outlined in the U.S. Constitution for budget proposals.

Agreed Federal Budget Process Compliance

The agreed-upon federal budget process has been followed approximately $4$ times by the federal government over the past $40$ years.

Mandatory Spending

Spending determined by existing entitlement laws rather than annual appropriations, representing the single largest category of federal spending.

Presidential Treaty Power

The constitutional power granted directly to the president to negotiate international treaties.

Trade Deficit Currency Effect

An economic tendency where the value of a nation's currency falls relative to its trade partner's currency (such as the U.S. dollar against the Chinese Yuan) when running a trade deficit.

U.S. Trade Balance Pattern

A persistent trade situation in which the United States runs a trade deficit in most years.

Floating Exchange Rates

An exchange rate regime where currency values are determined entirely by the supply and demand forces of the free market.

Managed Exchange Rates

Exchange rates that are primarily determined by free-market forces but are slightly regulated or influenced by government intervention.

Fixed Exchange Rates

Exchange rates that are set and pegged directly by a government rather than determined by market forces.

Oligopoly

A market structure dominated by only a few large firms.

Standard Oil

The first major corporate entity broken up by the U.S. government for violating antitrust laws as an illegal monopoly.

Labor Exemption under the Clayton Act

The provision establishing that labor is not a commodity, meaning labor unions are legally exempt from antitrust (Sherman Act) regulations.

Export (Balance of Payments)

Any economic transaction resulting in money entering the United States, which does not strictly require a physical good to leave the country.

Nexus

The establishment of a formal connection, presence, or commercial foothold in a jurisdiction.

Current Account

The section of the Balance of Payments tracking one-time transactions of goods and services that can be purchased repeatedly without creating ownership of an entity (e.g., selling corn to Japan).

Capital Account

The section of the Balance of Payments recording financial transfers, licensing agreements, and asset purchases establishing ownership or a nexus (e.g., China purchasing AMC, or licensing royalties).

Currency Depreciation

A decline in the purchasing power or exchange value of a currency, such as the U.S. dollar declining from $\$1 = 400\text{ Yen}$ in 1970 to $\$1 = 100\text{ Yen}$.

Exchange Rate Impact on Foreign Consumers

When the domestic currency (the dollar) appreciates relative to a foreign currency (the Yen), foreign consumers face higher domestic prices (e.g., Japanese tourists find U.S. hotel rooms more expensive).

Congressional Trade and Monetary Powers

Constitutional authorities explicitly assigned to Congress, including levying tariffs, regulating foreign commerce, and controlling exchange rates.

Bretton Woods Agreement

The 1944 international monetary agreement that established the U.S. dollar as the primary reserve and key currency of the world.

Debt-Financed Trade Deficit

The mechanism whereby a country running a trade deficit (such as the U.S. with China) issues debt to that trading partner to finance the gap between imports and exports.

U.S. Tariff Structure

Tariffs that are kept generally very low on average, though specific rates may legally exceed $300\%$.

National Security Tariff Justification

The executive mechanism used by President Trump to implement tariffs without prior Congressional approval by declaring a national security concern with trading partners.

Paradise, Nevada

The unincorporated town where the University of Nevada, Las Vegas (UNLV) is located.

Fiscal Year

An accounting period of twelve months used for government budgeting, which starts on July 1 for Nevada and most U.S. states.

Statement of Accounts Clause

The constitutional requirement directing the federal government to publish a regular statement of public receipts and expenditures 'from time to time.'

Long-Term Constitutional Budget Requirement

Zero years; the Constitution contains no requirement or guideline for multi-year budget planning.

PAYGO (Pay-As-You-Go)

The budget rule system enacted during the 1990s requiring that new spending or tax cuts be offset by other savings, which produced a balanced federal budget.

Non-Enumerated Federal Expenditures

Federal expenditure areas, such as the national parks, that are funded in practice but are not specifically named in the text of the Constitution.

International Monetary Fund (IMF)

An international monetary institution that structurally and functionally operates as a bank.

World Bank

An international development institution that structurally and functionally operates as a fund.

Enumerated Powers

The specific powers explicitly listed and granted to the federal government, particularly Congress, by the U.S. Constitution.

Fiat Money

A faith-based currency that is not backed by a physical commodity such as gold or silver.