Module 3 Flashcards
amendment
a change made to a constitution, contract, or other formal document
bank run
a situation in which large depositors at a bank attempt to withdraw their savings at the same time, usually resulting in the bankruptcy of the financial institution
bicameral legislature
a legislature comprised of two legislative houses, both of which must approve a bill before it becomes law
bill
a proposed law under consideration by the government
coalition government
in a parliamentary system, this term describes a situation where two or more rival parties agree to work together by combining the seats they have won in an election to have a sufficient number of seats to form the government
Collateralized Debt Obligation (CDO)
a complex type of investment in which individual loans are packaged together and sold to investors seeking to profit from the loan payments
consumerism
an economic philosophy based on the continued and increasing consumption of goods by the population
credit rating agency
a business that assesses an individual or organization’s financial status and history and assigns a rating that indicates the perceived likelihood of a loan being paid back
deficit
the negative value obtained when expenditures exceed income
demand-side economics
an economic theory that advocates direct government intervention in the economy through fiscal measures such as government spending and taxation; also called Keynsian economics
Electoral College system
the method used to select the president of the United States in which voters cast ballots for official electors who then vote to select the president
electorate
the citizens within a population who are eligible to vote
Federal Reserve
the central bank in the United States
federal system
a system of government under which power is divided between the national government and provincial, state, or territorial governments
first-past-the-post
an electoral system in which the winning candidate is the one who receives the highest number of votes; also called the simple plurality system
fiscal policy
government policies with respect to spending and taxation
frozen-credit markets
refers to a situation in which financial institutions are reluctant to lend money to consumers, businesses, or to one another because economic conditions increase the likelihood that borrowers will fail to pay back loans
Great Depression
a deep and prolonged economic downturn that lasted through most of the 1930s
income disparity
the difference in earnings between the wealthy and poorer members of society
inflation
a decrease in the purchasing power of money, typically characterized by rising prices and demands for wage increases