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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, and Money

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, and Mexico to lift trade barriers, which was signed in 1993

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, and per capita income

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

Absolute Poverty

The inability of an individual or a family to afford a basic standard of goods and services, where the standard is absolute and unchanging over time.

Administrative barriers

Trade protection measures taking the form of administrative procedures that countries may use to prevent the free flow of imports into a country.

Anti-dumping

An argument that justifies trade protection policies: if a country's trading partner is suspected of practicing dumping, than the country should have the right to impose trade protection measures (tariffs or quotas) to limit quantities of the dumped good.

Merit goods

Goods that are held to be desirable for consumers, but which are under provided by the market

Most Favored Nation Status

Country that receives the equal trade advantages by the country granting such treatment

Money Illusion

Tendency of people to think in nominal terms rather than real

Monetarism

Idea that states that inflation depends on how much money the government prints

Efficient Market Hypothesis

Stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices

Time Value of Money

Money available at the present time is worth more than the same amount in the future due to its potential earning capacity

Rubinomics

Government concentrate on reducing the deficit instead of spending money on infrastructure

Dumping

Practice of lowering the price of a good entering a foreign market than it charges domestic customers

Alfred Marshall

English economist that came up with the idea that price and quantity are determined by the intersection of demand and supply

Steven Mnuchin

Secretary of Treasury

Classical Economics

Economic theory that states that markets function best with minimal government interference

Keynesian Economics

Economic theory that the government can take action to influence aggregate demand

Neoclassical Economics

Economic theory that believes that economy functions best when people maximize personal satisfaction

Solow Model

Model that shows economic growth is influenced by technology, capital, and labor

Life Cycle Hypothesis

People will spend money at a level consistent with their expected long term average income

Purchasing Power

Measure of how much a country's currency can buy

Supply Side Economics

Economic theory that states that economic growth can be created by investing in capital and aiding in the production of goods and services

Sole Proprietorship

Business model in which a single person owns a business and is responsible for its debts or profits

Bilateral monopoly

A market in which there is a single seller and a single buyer

Board of Governors

Group that supervises and controls the money and banking system of the United States

7

How many members are on the board of governors?

Coase theorem

Economic theory that states that with no transaction costs, efficiency can be achieved regardless of property rights

Tradable Permits

Instruments meant to reduce pollution by selling permits for the right to pollute

Cost of Living Adjustment

Changes made to social security and supplemental security income to counteract the effects of inflation

Conglomerate merger

Merger of a firm in one industry with a firm in another industry

Behavioral Economics

Economic analysis that applies psychological insights into human behavior to explain economic decision-making

Specific Tariff

Tariff that charges a fixed amount per unit of import

Ad valorem tariff

Tariff that charges a fixed percentage of the price of the commodity imported

Partnership

Business model in which two or more individuals share the profits and liabilities of a business venture

Corporation

Business model in which the business is separate and distinct from its owners

Beige Book

Federal Reserve report of the current economic conditions as reported by the banks

DOJ and FTC

Government agencies responsible for enforcing antitrust laws

Short selling

Sale of a security that is not owned by the seller

Members of the Board of Governors, New York Federal Bank President, 4 Regional Federal Bank Presidents

Voting members of the Federal Reserve Bank

Federal Open Market Committee

Part of the Federal Reserve system responsible for conducting monetary policy through open market operations

1975

Last year the US experienced a trade surplus

Increase in money supply

What fuels long run inflation

Mutual Fund

Pool of funds collected from many investors to purchase bonds and/or stocks

Pension Fund

Retirement plan that requires an employer to make contributions into a pool of funds set aside

Closed Shop

Situation in which employers agree to hire only union workers

Shares Outstanding

Total number of shares in a company

Float

Number of shares that are actually available for trading in a company

2001

Last year USA had a budget surplus

68%

Consumption is _______ percent of GDP in USA

15%

Investment is ________ percent of GDP in USA

20%

Government Spending is _______ percent of GDP in USA

-3%

Net exports is _______ of GDP in USA