Econ Final Flashcards
(130 cards)
1
Q
Griswold v. Connecticut (1965)
A
Ninth amendement–> people have rights not enumerated in constitution: was ignored for 150 years.
people have right to privacy
2
Q
Miranda v. Arizona (1966)
A
the right to remain silent
3
Q
Roe v. Wade (1973)
A
that abortion must be legal in all 50 states
women have right to choose abortion with reasonable exceptions
4
Q
McCulloch v. Maryland (1819)
A
FEDERALISM;
1) Constitution grants to Congress implied powers for implementing Consittution’s express powers–> create functional national gov.
2) State action may not impede valid constitutional exercises of power by Federal government. Enforced supremacy clause
5
Q
United States v. Virginia (1996)
A
Women had to be admitted to public male-only institution
6
Q
Brown v. Education (1954)
A
overturned Plessy; “separate but equal” is now unconstitutional
7
Q
Plessy v. Ferguson (1893)
A
Supreme Court upheld segregation and constitutionality of “separate but equal” doctrine
8
Q
Dobbs v. Jackson Women’s Health Organization (2022)
A
Dobbs overturned Roe v. Wade and Planned Parenthood of Southern Pa. v. Casey, 505 vs 833
*Now a states’ rights issue (6-3 vote)
9
Q
Marbury v. Madison (1803)
A
basis for JUDICIAL REVIEW
Chief Justice Marshall ruled Constitution as the Supreme Law of the Land
10
Q
Engel v. Vitale (1962)
A
banned state-sponsored prayer, even if voluntary and non-denominational in public schools
11
Q
United States v. Nixon (1974)
A
Constitution overrules some “executive privileges” in criminal cases
Nixon refused to release tapes but overruled by court
Ruling: President as well must obey laws of the Constitution
12
Q
Dred Scott v. Sanford (1857)
A
Court upheld property rights over human rights
Can’t be free just because you’re on free land (“free soil” states)
13
Q
Schenck v. United States (1919)
A
Limited free speech in time of war
14
Q
Reagents of University of California v. Bakke (1978)
A
Affirms constitutionality of Affirmative Action
15
Q
Students for Fair Admissions V. Harvard (2023_
A
Overturned Affirmative Action
Court ruled both cases violated equal Protection Clause of Constitution and was Constitutional (6-3 vote)
16
Q
judicial activism:
A
loose constructionist
17
Q
census is every how many years?
A
10 years
18
Q
use government spending to fight a recessionary
A
^G–>^C^I–>^AD–>^GDP–>^PL–>^Empl.
19
Q
Use taxes to stimulate an underperforming economy
A
DownT–>^DI–>^C^I–>^AD–>^GDP–>^PL–>^Empl.
20
Q
4 types of monetary policies the central bank can use to stimulate an underperforming economy or fight an overheating economy?
A
reserve rate, discount rate, federal funds rate, discount rate, and open market operations
21
Q
Use reserve rate to stimulate an underperforming economy
A
DownRR–>^MS–>Downi–>^C^I–>^AD–>^GDP–>^PL–>^Empl.
22
Q
Use FFR to fight off a recession
A
DownFFR–>^MS–>Downi–>^C^I–>^AD–>^GDP–>^PL–>^Empl.
23
Q
2 expansionary fiscal policies the government can use
A
increase or decrease government spending and cut or raise tax rates
24
Q
use discount rate to stimulate an underperforming economy
A
DownDR–>^MS–>Downi–>^C^I–>^AD–>^GDP–>^PL–>^Empl.
25
Use open market operations to fight off a recession
Buy bonds→↑MS→↓i→↑C↑I→↑AD→↑GDP→↑PL→↑Empl.
26
2 adjectives to describe MONETARY policy when slowing down the economy
tight and contractionary monetary policy
27
6 adjectives to describe the monetary policy when stimulating the economy
loose and expansionary monetary policy, easy money policy, quantitative easing, accommodative, and easing
28
adjective for a fiscal policy that fights off a recession
expansionary fiscal policy
29
expansionary fiscal policy
adjective for a fiscal policy that fights off a recession
30
adjective for fiscal policy that fights an overheating economy
contractionary fiscal policy
31
Who is the head of the US Federal Reserve?
Jerome Powell
32
Use government spending to fight an overheating economy.
↓G→↓C↓I→↓AD→↓GDP→↓PL→↓Empl
33
Use taxes to fight an inflationary economy
↑T→↓DI→↓C↓I→↓AD→↓GDP→↓PL→↓Empl.
34
Use reserve rate to fight an overheating economy
↑RR→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl.
35
Use discount rate to fight an inflationary economy
↑DR→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl
36
Use FFR to fight an overheating economy
↑FFR→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl
37
Use required reserve to fight an inflationary economy
↑RR→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl.
38
Use open market operations to fix an overheating economy
Sell bonds→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl.
39
US GDP
$23 trillion
40
US national debt
$29 trillion
41
Define balanced budget
A government spends the same as they tax in a year
42
Define budget surplus.
A government spends less than they tax in a year.
43
Define budget deficit
A government spends more than they tax in a year.
44
What are the payroll taxes?
Social security and medicare taxes
45
What are regressive taxes?
a type of tax that is assessed regardless of income, in which low- and high- income earners pay the same dollar amount
46
What does the IRS stand for?
Internal Revenue Service which is the US government tax collecting agency.
47
Formula for disposable income
Personal Income - Taxes = Disposable Income
PI-T=DI
48
What is reserve requirement?
the fraction of deposits that the Fed requires banks to hold as reserves
49
Define FFR
the interest rate a bank must pay to take an overnight, bank to bank loan
50
Define discount rate.
Interest rate a bank must pay to get a loan from the Fed
51
Define open market operations (OMO)
When the fed buys bonds to boost the economy or sells bonds to slow an economy.
52
What does IMF stand for and what are they known for?
IMF stand for the INTERNATIONAL MONETARY FUND known for being the "lender of last resort". The IMF will bail you out but with serious strings attached.
53
Define austerity
serious tax hikes and major government spending cuts (belt tightening)
54
Define monetizing debt
When a government prints money to pay off debt creating mass inflation
55
Define Keynesian Economics
Theory that states Recessions or overheating periods are caused by too little Aggregate Demand or too much Aggregate Demand. Governments should use fiscal policies to intervene in the economy to flatten or stimulate economy.
56
Who benefits and loses from inflation?
Everyone hurt by inflation except borrowers.
57
What makes up GDP?
Consumer spending, business investment, government spending, and net exports
58
What makes up net exports?
Exports - Imports
59
What percent of GDP does consumer spending make up?
70%
60
What happens if a country's trade deficit shrinks?
the country's GDP rises
61
What happens if a country's trade surplus rises?
GDP increases
62
Country A's trading partner begins to have a booming economy what happens to the country's exports, Xn, AD, and GDP?
All will rise if their biggest trade partner has a booming economy
63
Country B's trading partner begins to have an underperforming economy what happens tot he country's exports, Xn, AD, and GDP?
all will fall
64
What happens to a country's imports, Xn, AD, GDP, PL, and employment when it has a strong currency?
If a country's currency is strong its imports will be up while Xn, AD, GDP, PL, and employment go down.
65
What happens to a country's exports, Xn, AD, GDP, PL, and employment if the currency is weak?
All decrease
66
How big is GDP if G=40, X=25, I= 17, M=35, C=50?
GDP= 97
67
What is demand pull-inflation?
When excessive demand pulls up prices.
68
3 adjectives to describe GDP increasing greater than 3%
Overheating, unsustainable growth, Inflationary
69
Who is in charge of monetary policy in a country? Fiscal policy?
The central bank(in the US the Fed or Federal Reserve) is in charge of monetary policy while a country's government is in charge of fiscal policy.
70
2 ADjectives to describe an economy growing less than 3%
Underperforming, recessionary
71
a country's target GDP?
3%
72
a country's target PL?
2%
73
a country's target unemployment rate?
4-5%
74
What percentage of the US economy is controlled/represented by the government?
35%
75
If demand for bonds goes up what happens to bond prices and bond yields?
↑Demand for bonds→↑Bond Prices→↓Bond Yields
76
If demand goes down for bonds what happens to bond prices and bond yields?
↓Demand for bonds→↓Bond Prices→↑Bond Yields
77
What happens to a country's demand for bonds if its budget deficit skyrockets?
Country's budget deficit↑→↓Demand for bonds→↓Bond Prices→↑Bond Yields
78
Why is the US dollar/bond seen as the default safe haven during an economic crisis?
The US dollar/bond is seen as the default safe haven due to it being the world's reserve currency and denomination for international business.
79
What happens to the US currency when foreigners sells or buys US bonds?
I foreigners buy more US bonds the value of the USD increases while it decreases if foreigners sell the bond.
80
GDP (Gross Domestic Product)
the sum of all final goods and and services produced in the nation in a year; a country's ECONOMY
81
buying bonds ___ the economy; selling bonds?
boosts, slows the economy
82
2 goals of Fed?
Price stability + maximum exmployment
83
GDP=
Consumer spending + Business Investment + Government Spending + Net Exports (Exports-Imports)
84
Aggregate Demand (AD)?
Aggregate means total. AD is total demand.
AD= C (all consumer spending) + I + G + Xn (net exports).
85
Inflation/Price Level (PL)
a general increase in prices in a society
86
What is the main cause of inflation?
excessive demand (High AD leads to high inflation and PL.)
87
What is a recession?
When an economy shrinks or contracts for 6 straight months or longer (for 2 quarters or more)
88
What are two adjectives that decribe an economy growing at less than 3 percent?
underperforming and recessionary
89
What are three adjectives that describe an economy with a growth of over 3% and lower than 5% unemployment rate?
overheating, unsustainable growth, inflationary
90
what kind of system is the US?
a modified free enterprise system
91
If demand exceeds supply... what is this?
Inflation
92
What is the equation for government budget?
Government budget= Tax Revenue - Government Spending
93
What is fiscal policy?
when the government intervenes in its economy to stimulate it when it is underperforming or to slow it down when it is overheating
94
What are 2 tools involved in fiscal policy?
Government Spending and Taxes
95
Who controls fiscal policy?
a nation's government (In US- NOT by the FED)
96
To stimulate an underperforming economy, use expansionary fiscal policy. Should the government increase or decrease government spending or cut or raise taxes?
Cut taxes and increase government spending
97
What is the equation for GDP?
GDP= C+I+G+Xn
98
What is one negative of EXPANSIONARY FISCAL POLICY?
The government budget moves toward deficit.
99
What kind of fiscal policy do you use to slow down an overheating economy? (to prevent inflation)
CONTRACTIONARY fiscal policy
Cut government spending and increase taxes.
100
What is one side benefit of contractionary fiscal policy?
The government budget moves toward surplus.
101
Who controls monetary policy?
a country's Central Bank--not its government (In the US: the FED or FEDERAL RESERVE)
102
What does monetary policy involve?
Controlling the supply of money and the cost of borrowing money--credit (interest rates!)
103
What kind of relationship do money supply and interest rates have?
Inverse relationship
104
What is the interest rate?(Def.)
the price one must pay to borrow someone else's money (ex: home,student,car,personal,business loans, etc.)
105
If a country's central bank increases the money supply, what will happen to the interest rates?
They will fall.
106
If there is ever a surplus of any product, what happens to its price?
It will fall.
107
If there is a shortage of any product, what happens to its price?
The price of the product rises.
108
What are open market operations also? (OMO)
The buying or selling of treasury bonds (government securities)
109
To slow an overheating or inflationary economy, what kind of monetary policy should the Fed use?
Tight monetary policy
110
What is the equation with deposits?
Deposits-required reserves = excess reserves or loanable funds
111
What is the federal funds rate?
The interest rate a bank must pay to take an overnight, bank-to-bank loan.
112
What kind of monetary policy do you need to stimulate a recessionary economy?
Loose monetary policy
113
What is the discount rate?
The interest rate a bank must pay to borrow directly from the Fed(real Reserve)
114
What does a LOW discount rate lead banks to do?
To take more risks and lend more of their money out
115
MS/M1=
Money Supply
116
M1 also =
all cash + all checking account
117
Government securities = ...
treasury bonds
118
Sometimes, what works in coordination with each other OR conflict with each other to maximize a stimulus or to slow an overheating economy?
the Fed's monetary policy and the government's fiscal policy
119
What kind of relationship do bond prices and bond yields/bond interest rates have?
an INVERSE relationship
120
If demand is high for bonds, what happens to the bond prices?
they rise and so bond interest rates/yield fall.
121
why are junk bonds the riskiest of all bonds?
they are high yield bonds; they pay high interest rates because they are the riskiest of all bonds. there is no insurance or guarantee on bonds. credit rating agencies like standard & poors and moodys will downgrade a government's securities to Junk status if there is a decent chance that government might default on its debt and therefore not pay bondholders. (ex: the Greek government compared to the German government)
122
What have US treasury bonds historically been seen as?
An international "safe haven" investment
International investors heavily buy US bonds in uncertain economic times globally.
123
If the dollar is STRONG, is it CHEAPER for the US to import?
Yes. So the US will import more, causing Xn to fall (^trade deficit) and therefore lower US AD and GDP, PL, and Employment.
124
As foreigners buy US bonds, are foreign currencies stronger or weakened?
Weakened
125
What are official reserves?
A government's national savings account or "rainy day fund"
126
If a country has a large debt, large deficits, and low official reserves, what is it at risk of?
Of potentially defaulting on its loans (its bonds)
127
IMF stands for
International Monetary Fund
128
When do countries turn to the IMF?
When it has a debt crisis or credit crunch (when lending dries up), to receive a bailout
129
What will austerity measures cause?
cause the country to have a substantial economic slowdown and a substantial increase in unemployment
130
What is the worst thing a country can do, even worse than taking the IMF bailout with conditions attached?
Defaulting
