Chapter 18 Flashcards
government regulations that try to keep monopolies from emerging
Antitrust policies
a budget in which expenditures equal revenues
Balanced budget
the peaks and valleys of the economy between boom and bust
Business cycle
a tax levied on the returns that people earn from capital investments, like the profits form the sale of stocks or a home
capital gains tax
the ability of unions to determine wages, hours, and working conditions in conjunction with the employer
collective bargaining
a plan in which people are taxed not on what they earn but on what they spend
consumption tax
shortfalls in the budget due to the government spending more in a year than it takes in
deficits
a sharp reduction in a nation’s GDP for more than a year accompanied by high unemployment
depression
the elimination of regulations in order to improve economic deficiency
deregulation
a period of fast economic growth in GDP, signaling prosperity
economic boom
a period of steep decline in GDP, signaling recession
economic bust
all the different strategies that government officials employ to solve economic problem
economic policy
consumer taxes levied on specific merchandise, such as cigarettes or alchohol
excise taxes
independent commission that controls the money supply through a system of twelve federal banks
federal reserve system
economic policy in which government regulates the economy through its powers to tax and spend
fiscal policy
a tax system in which all people pay the same percentage of their income
flat tax
policies that encourage open borders between trading partners by eliminating protectionist policies
free trade policies
total market value of all goods and services produced by everyone in a particular country during a given year.
gross domestic product
was the general economic decline observed in world markets around the end of the first decade of the 21st century
great recession
passed in 1947; limit the power of labor unions, prohibits fed workers from striking and allows firing of workers who do strike; Reagan fired 12000 striking fed air traffic controllers
taft-hartley act
passed in 1933 by congress; banking reforms: FDIC - insured money deposited in banks; parts repealed in 1999 for subprime mortgage trade - caused 2008 recession
glass-steagall act
increased fed oversight and control over derivatives trading; volcker rule prevents banks from speculating with their won money; didn’t bring dramatic change in ways banks do business
dodd-frank act
american’s tax for reform: promotes a flat tax, conservative
Grover Norquist
allowed for unionization of employees; established national labor relations board to oversee labor laws and investigate complaints; allowed unions to engage in collective bargaining
Wagner Act
fed chair of the federal reserve system; helped gov run a balanced budget to surplus in 1998
allan greenspan (ayn rand)
Janet Yellen
next fed chair?
a contract that derives its value from an underlying entity (asset, index, interest rate)
derivatives
financial swap agreement that the seller of the CDS will compensate the buyer in the event of a loan default or other credit event; invented by masters and jp morgan
credit default swaps (cds)
federal national mortgage assoc./federal home loan mortgage corporation
Fannie mae and Freddie mac
an increase in the price of goods
inflation
the cost of borrowing money calculated as a percentage of the money borrowed
interest rates
an economic theory that government could stimulate a lagging economy by putting more money into it or cool off an inflationary economy by taking money out
keynesianism
basic principles that regulate the economic market and influence the price of a good
laws of supply and demand
economic policy in which government regulates the economy by manipulating interest rates to control the money supply
monetary policy
a situation in which a single producer dominates a market and there is no competition
monopoly
the total of the nation’s unpaid deficits, or simply the sum total of what the national government owes
national debt
no tax on trade between north american countries
NAFTA
taxes whose rates increase with income
Progressive taxes
the imposition of trade barriers, especially tariffs, to make trading conditions favorable to domestic procedures
Protectionism
a decline in GDP for two consecutive quarters
Recession
taxes that require poor to pay more of their income than the wealthy
Regressive taxes
an ideal market that corrects itself when it moves in an inflationary or recessionary direction
self-regulating market
reagan’s economic plan, tax cuts generate more gov revenues because the rich would be able to buy more stuff.
supply side economics
the extra funds available because government revenues are greater than its expenditures
surpluses
the difference between the value of the goods a country imports and what it exports
trade deficit
a consumption tax levied at each stage of production, based on the value added to the product at that stage
value-added tax
economic slump in industrialized areas of the world from 1929-39
Great depression
no govt influence needed, free enterprise system will correct economy
Laissez-faire economics
strongest advocates of govt. action in 1930s; british economist; gov should step in using fiscal policy
john maynard keynes
regulated financial institutions to explain their information sharing practices to their customers and safeguard sensitive data
gramm-leach-Bliley Act
bush admin used to bailout financial institutions deemed “too big to fail”; $30 billion
troubled assets relief program (tarp)
gave the pres the responsibility for preparing and delivering to congress a national budget; created Office of management and budget (OMB); approved by congress
Budget and accounting act of 1921
levied on employers and employees to fund SS program;collected in form of payroll tax or self-employment tax
social security tax
added $900 billion of spending on tax relief for individuals and businesses; Keynesian; +3.3 million jobs by 2011
American recovery and reinvestment act of 2009 (stimulus bill)
current fed chair of the federal reserve system
Paul Bernanke
a former Goldman Sachs bond trader known for his colorful nickname “Fabulous Fab,” was found liable for fraud Thursday for his role in a failed mortgage deal that cost investors $1 billion in a debacle that foreshadowed the financial crisis
Fabrice Toure
collection of nonbank financial intermediaries that provide services similar to traditional commercial banks
Shadow banking system
a structured financial product that pools together cash flow generating assets and repackages this asset pool into discrete tranches that can be sold to investors; high risk
Collaterized debt obligations (CDOs)
investment theory, it is impossible to beat the market because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information
Efficient markets hypothesis
