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AP Econ > Econ Final > Flashcards

Econ Final Flashcards

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

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2
Q

Miranda v. Arizona (1966)

A

the right to remain silent

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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

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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

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5
Q

United States v. Virginia (1996)

A

Women had to be admitted to public male-only institution

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6
Q

Brown v. Education (1954)

A

overturned Plessy; “separate but equal” is now unconstitutional

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7
Q

Plessy v. Ferguson (1893)

A

Supreme Court upheld segregation and constitutionality of “separate but equal” doctrine

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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)

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9
Q

Marbury v. Madison (1803)

A

basis for JUDICIAL REVIEW
Chief Justice Marshall ruled Constitution as the Supreme Law of the Land

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10
Q

Engel v. Vitale (1962)

A

banned state-sponsored prayer, even if voluntary and non-denominational in public schools

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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

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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)

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13
Q

Schenck v. United States (1919)

A

Limited free speech in time of war

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14
Q

Reagents of University of California v. Bakke (1978)

A

Affirms constitutionality of Affirmative Action

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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)

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16
Q

judicial activism:

A

loose constructionist

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17
Q

census is every how many years?

A

10 years

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18
Q

use government spending to fight a recessionary

A

^G–>^C^I–>^AD–>^GDP–>^PL–>^Empl.

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19
Q

Use taxes to stimulate an underperforming economy

A

DownT–>^DI–>^C^I–>^AD–>^GDP–>^PL–>^Empl.

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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

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21
Q

Use reserve rate to stimulate an underperforming economy

A

DownRR–>^MS–>Downi–>^C^I–>^AD–>^GDP–>^PL–>^Empl.

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22
Q

Use FFR to fight off a recession

A

DownFFR–>^MS–>Downi–>^C^I–>^AD–>^GDP–>^PL–>^Empl.

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23
Q

2 expansionary fiscal policies the government can use

A

increase or decrease government spending and cut or raise tax rates

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24
Q

use discount rate to stimulate an underperforming economy

A

DownDR–>^MS–>Downi–>^C^I–>^AD–>^GDP–>^PL–>^Empl.

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25
Q

Use open market operations to fight off a recession

A

Buy bonds→↑MS→↓i→↑C↑I→↑AD→↑GDP→↑PL→↑Empl.

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26
Q

2 adjectives to describe MONETARY policy when slowing down the economy

A

tight and contractionary monetary policy

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27
Q

6 adjectives to describe the monetary policy when stimulating the economy

A

loose and expansionary monetary policy, easy money policy, quantitative easing, accommodative, and easing

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28
Q

adjective for a fiscal policy that fights off a recession

A

expansionary fiscal policy

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29
Q

expansionary fiscal policy

A

adjective for a fiscal policy that fights off a recession

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30
Q

adjective for fiscal policy that fights an overheating economy

A

contractionary fiscal policy

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31
Q

Who is the head of the US Federal Reserve?

A

Jerome Powell

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32
Q

Use government spending to fight an overheating economy.

A

↓G→↓C↓I→↓AD→↓GDP→↓PL→↓Empl

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33
Q

Use taxes to fight an inflationary economy

A

↑T→↓DI→↓C↓I→↓AD→↓GDP→↓PL→↓Empl.

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34
Q

Use reserve rate to fight an overheating economy

A

↑RR→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl.

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35
Q

Use discount rate to fight an inflationary economy

A

↑DR→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl

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36
Q

Use FFR to fight an overheating economy

A

↑FFR→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl

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37
Q

Use required reserve to fight an inflationary economy

A

↑RR→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl.

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38
Q

Use open market operations to fix an overheating economy

A

Sell bonds→↓MS→↑i→↓C↓I→↓AD→↓GDP→↓PL→↓Empl.

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39
Q

US GDP

A

$23 trillion

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40
Q

US national debt

A

$29 trillion

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41
Q

Define balanced budget

A

A government spends the same as they tax in a year

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42
Q

Define budget surplus.

A

A government spends less than they tax in a year.

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43
Q

Define budget deficit

A

A government spends more than they tax in a year.

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44
Q

What are the payroll taxes?

A

Social security and medicare taxes

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45
Q

What are regressive taxes?

A

a type of tax that is assessed regardless of income, in which low- and high- income earners pay the same dollar amount

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46
Q

What does the IRS stand for?

A

Internal Revenue Service which is the US government tax collecting agency.

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47
Q

Formula for disposable income

A

Personal Income - Taxes = Disposable Income
PI-T=DI

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48
Q

What is reserve requirement?

A

the fraction of deposits that the Fed requires banks to hold as reserves

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49
Q

Define FFR

A

the interest rate a bank must pay to take an overnight, bank to bank loan

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50
Q

Define discount rate.

A

Interest rate a bank must pay to get a loan from the Fed

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51
Q

Define open market operations (OMO)

A

When the fed buys bonds to boost the economy or sells bonds to slow an economy.

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52
Q

What does IMF stand for and what are they known for?

A

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.

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53
Q

Define austerity

A

serious tax hikes and major government spending cuts (belt tightening)

54
Q

Define monetizing debt

A

When a government prints money to pay off debt creating mass inflation

55
Q

Define Keynesian Economics

A

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
Q

Who benefits and loses from inflation?

A

Everyone hurt by inflation except borrowers.

57
Q

What makes up GDP?

A

Consumer spending, business investment, government spending, and net exports

58
Q

What makes up net exports?

A

Exports - Imports

59
Q

What percent of GDP does consumer spending make up?

A

70%

60
Q

What happens if a country’s trade deficit shrinks?

A

the country’s GDP rises

61
Q

What happens if a country’s trade surplus rises?

A

GDP increases

62
Q

Country A’s trading partner begins to have a booming economy what happens to the country’s exports, Xn, AD, and GDP?

A

All will rise if their biggest trade partner has a booming economy

63
Q

Country B’s trading partner begins to have an underperforming economy what happens tot he country’s exports, Xn, AD, and GDP?

A

all will fall

64
Q

What happens to a country’s imports, Xn, AD, GDP, PL, and employment when it has a strong currency?

A

If a country’s currency is strong its imports will be up while Xn, AD, GDP, PL, and employment go down.

65
Q

What happens to a country’s exports, Xn, AD, GDP, PL, and employment if the currency is weak?

A

All decrease

66
Q

How big is GDP if G=40, X=25, I= 17, M=35, C=50?

A

GDP= 97

67
Q

What is demand pull-inflation?

A

When excessive demand pulls up prices.

68
Q

3 adjectives to describe GDP increasing greater than 3%

A

Overheating, unsustainable growth, Inflationary

69
Q

Who is in charge of monetary policy in a country? Fiscal policy?

A

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
Q

2 ADjectives to describe an economy growing less than 3%

A

Underperforming, recessionary

71
Q

a country’s target GDP?

A

3%

72
Q

a country’s target PL?

A

2%

73
Q

a country’s target unemployment rate?

A

4-5%

74
Q

What percentage of the US economy is controlled/represented by the government?

A

35%

75
Q

If demand for bonds goes up what happens to bond prices and bond yields?

A

↑Demand for bonds→↑Bond Prices→↓Bond Yields

76
Q

If demand goes down for bonds what happens to bond prices and bond yields?

A

↓Demand for bonds→↓Bond Prices→↑Bond Yields

77
Q

What happens to a country’s demand for bonds if its budget deficit skyrockets?

A

Country’s budget deficit↑→↓Demand for bonds→↓Bond Prices→↑Bond Yields

78
Q

Why is the US dollar/bond seen as the default safe haven during an economic crisis?

A

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
Q

What happens to the US currency when foreigners sells or buys US bonds?

A

I foreigners buy more US bonds the value of the USD increases while it decreases if foreigners sell the bond.

80
Q

GDP (Gross Domestic Product)

A

the sum of all final goods and and services produced in the nation in a year; a country’s ECONOMY

81
Q

buying bonds ___ the economy; selling bonds?

A

boosts, slows the economy

82
Q

2 goals of Fed?

A

Price stability + maximum exmployment

83
Q

GDP=

A

Consumer spending + Business Investment + Government Spending + Net Exports (Exports-Imports)

84
Q

Aggregate Demand (AD)?

A

Aggregate means total. AD is total demand.
AD= C (all consumer spending) + I + G + Xn (net exports).

85
Q

Inflation/Price Level (PL)

A

a general increase in prices in a society

86
Q

What is the main cause of inflation?

A

excessive demand (High AD leads to high inflation and PL.)

87
Q

What is a recession?

A

When an economy shrinks or contracts for 6 straight months or longer (for 2 quarters or more)

88
Q

What are two adjectives that decribe an economy growing at less than 3 percent?

A

underperforming and recessionary

89
Q

What are three adjectives that describe an economy with a growth of over 3% and lower than 5% unemployment rate?

A

overheating, unsustainable growth, inflationary

90
Q

what kind of system is the US?

A

a modified free enterprise system

91
Q

If demand exceeds supply… what is this?

A

Inflation

92
Q

What is the equation for government budget?

A

Government budget= Tax Revenue - Government Spending

93
Q

What is fiscal policy?

A

when the government intervenes in its economy to stimulate it when it is underperforming or to slow it down when it is overheating

94
Q

What are 2 tools involved in fiscal policy?

A

Government Spending and Taxes

95
Q

Who controls fiscal policy?

A

a nation’s government (In US- NOT by the FED)

96
Q

To stimulate an underperforming economy, use expansionary fiscal policy. Should the government increase or decrease government spending or cut or raise taxes?

A

Cut taxes and increase government spending

97
Q

What is the equation for GDP?

A

GDP= C+I+G+Xn

98
Q

What is one negative of EXPANSIONARY FISCAL POLICY?

A

The government budget moves toward deficit.

99
Q

What kind of fiscal policy do you use to slow down an overheating economy? (to prevent inflation)

A

CONTRACTIONARY fiscal policy
Cut government spending and increase taxes.

100
Q

What is one side benefit of contractionary fiscal policy?

A

The government budget moves toward surplus.

101
Q

Who controls monetary policy?

A

a country’s Central Bank–not its government (In the US: the FED or FEDERAL RESERVE)

102
Q

What does monetary policy involve?

A

Controlling the supply of money and the cost of borrowing money–credit (interest rates!)

103
Q

What kind of relationship do money supply and interest rates have?

A

Inverse relationship

104
Q

What is the interest rate?(Def.)

A

the price one must pay to borrow someone else’s money (ex: home,student,car,personal,business loans, etc.)

105
Q

If a country’s central bank increases the money supply, what will happen to the interest rates?

A

They will fall.

106
Q

If there is ever a surplus of any product, what happens to its price?

A

It will fall.

107
Q

If there is a shortage of any product, what happens to its price?

A

The price of the product rises.

108
Q

What are open market operations also? (OMO)

A

The buying or selling of treasury bonds (government securities)

109
Q

To slow an overheating or inflationary economy, what kind of monetary policy should the Fed use?

A

Tight monetary policy

110
Q

What is the equation with deposits?

A

Deposits-required reserves = excess reserves or loanable funds

111
Q

What is the federal funds rate?

A

The interest rate a bank must pay to take an overnight, bank-to-bank loan.

112
Q

What kind of monetary policy do you need to stimulate a recessionary economy?

A

Loose monetary policy

113
Q

What is the discount rate?

A

The interest rate a bank must pay to borrow directly from the Fed(real Reserve)

114
Q

What does a LOW discount rate lead banks to do?

A

To take more risks and lend more of their money out

115
Q

MS/M1=

A

Money Supply

116
Q

M1 also =

A

all cash + all checking account

117
Q

Government securities = …

A

treasury bonds

118
Q

Sometimes, what works in coordination with each other OR conflict with each other to maximize a stimulus or to slow an overheating economy?

A

the Fed’s monetary policy and the government’s fiscal policy

119
Q

What kind of relationship do bond prices and bond yields/bond interest rates have?

A

an INVERSE relationship

120
Q

If demand is high for bonds, what happens to the bond prices?

A

they rise and so bond interest rates/yield fall.

121
Q

why are junk bonds the riskiest of all bonds?

A

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
Q

What have US treasury bonds historically been seen as?

A

An international “safe haven” investment
International investors heavily buy US bonds in uncertain economic times globally.

123
Q

If the dollar is STRONG, is it CHEAPER for the US to import?

A

Yes. So the US will import more, causing Xn to fall (^trade deficit) and therefore lower US AD and GDP, PL, and Employment.

124
Q

As foreigners buy US bonds, are foreign currencies stronger or weakened?

A

Weakened

125
Q

What are official reserves?

A

A government’s national savings account or “rainy day fund”

126
Q

If a country has a large debt, large deficits, and low official reserves, what is it at risk of?

A

Of potentially defaulting on its loans (its bonds)

127
Q

IMF stands for

A

International Monetary Fund

128
Q

When do countries turn to the IMF?

A

When it has a debt crisis or credit crunch (when lending dries up), to receive a bailout

129
Q

What will austerity measures cause?

A

cause the country to have a substantial economic slowdown and a substantial increase in unemployment

130
Q

What is the worst thing a country can do, even worse than taking the IMF bailout with conditions attached?

A

Defaulting

AP Econ (3 decks)

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