Unit 4 Key Terms Part 1

Question 1

the establishment, by the government, of rules aimed at influencing the behavior of firms and individuals; regulation can involve setting prices, establishing product and workplace standards, and limiting entry into an industry

Answer 1

Regulation

Question 2

Agency in US Department of Commerce that issues patents and trademark registration to inventors

Answer 2

USTPO

Question 3

the power of a government to take an individual’s property for public use if the owner is fairly compensated

Answer 3

Eminent Domain

Question 4

a clause of the Fifth Amendment to the Constitution stating that the government must pay private owners when their property is taken for public use under the power of eminent domain

Answer 4

Takings Clause

Question 5

case with ruling that held that the benefits of economic redevelopment do qualify as public use within the meaning of the Fifth Amendment

Answer 5

Kelo vs. City of New London

Question 6

a unit of government created to set and enforce standards for a particular industry or area of economic activity

Answer 6

Regulatory Agency

Question 7

an illegal, anticompetitive practice in which two or more firms agree to set a common price for a good or service

Answer 7

Price Fixing

Question 8

an illegal, anticompetitive practice in which two or more firms agree in advance which one will submit the lowest bid for a contract offered through a competitive bidding process

Answer 8

Bid Rigging

Question 9

an illegal, anticompetitive practice in which two or more firms agree to divide a market among themselves, selling only to certain customers or in certain geographic areas

Answer 9

Market Division

Question 10

the combining of two or more separately owned firms into a single firm

Answer 10

Merger

Question 11

“Let the buyer beware”; serves as a warning to buyers that they purchase goods and services at their own risk

Answer 11

Caveat Emptor

Question 12

Novel by Upton Sinclair that described what went on in meat packing plants

Answer 12

The Jungle

Question 13

Oversees the testing and approval of drugs before they go on the market

Answer 13

FDA

Question 14

Book by Ralph Nader that claimed that automobiles were unsafe and that the auto industry resisted making cars safer because of the added cost

Answer 14

Unsafe at Any Speed

Question 15

insures nearly all bank deposits for up to $100,000 per depositor

Answer 15

FDIC

Question 16

Protects investors by making sure they have the information they need to judge whether to buy, sell, or hold a particular security; establishes and enforces rules to ensure that companies provide that information in a timely and accurate manner

Answer 16

SEC

Question 17

sets safety and health standards for industries

Answer 17

OSHA

Question 18

a situation in which a regulatory agency is dominated, or captured, by the industry it regulates; a captured agency tends to favor the industry it is meant to regulate more than the public interest

Answer 18

Regulatory Capture

Question 19

the process of removing government restrictions on firms in order to promote competition or encourage economic activity

Answer 19

Deregulation

Question 20

the supplying of a good or service by the government; examples include the services provided by publicly supported schools and universities

Answer 20

Public Provision

Question 21

a coupon used to purchase a specific good or service

Answer 21

Voucher

Question 22

a policy approach—often applied to environmental policy—that relies on market incentives, rather than regulation, to influence behavior

Answer 22

Market-Based-Policies

Question 23

a tax on producers that is designed to reduce negative externalities, such as pollution

Answer 23

Corrective Tax

Question 24

a policy that limits the amount of pollution a firm may legally emit each year but allows firms to trade with each other to obtain additional pollution permits

Answer 24

Cap and Trade

Question 25

a government license, issued under a cap-and-trade system, that allows a producer to emit a certain amount of pollution

Answer 25

Pollution Permits

Question 26

a resource that everyone has access to and can be easily overused or destroyed; examples include the atmosphere and the oceans

Answer 26

Common Resource

Question 27

a circumstance in which a shared resource is overused or destroyed because users take no responsibility for its preservation

Answer 27

Tragedy of the Commons

Question 28

a fee for the use of a common facility, such as a bridge or highway

Answer 28

Toll

Question 29

the maximum amount of a resource that a person is allowed to use or consume in a given period of time

Answer 29

Quota

Question 30

to convert a publicly owned resource or institution to private ownership

Answer 30

Privatize

Question 31

an inefficient allocation of resources caused by government intervention in the economy

Answer 31

Government Failure

Question 32

a practice in which law-makers agree to vote for each other’s legislation

Answer 32

Logrolling

Question 33

created dozens of new programs and agencies aimed at reforming the banking system, helping businesses, and providing jobs

Answer 33

New Deal

Question 34

a policy or action designed to promote business activity and stimulate economic growth

Answer 34

Economic Stimulus

Question 35

any one of the five groups of a population that has been divided into fifths for the purpose of data analysis; for example, the top quintile of a country’s population in terms of income represents the top fifth of all earners

Answer 35

Quintiles

Question 36

the percentage of the population that has a family income below a government-defined threshold, or poverty line

Answer 36

Poverty Rate

Question 37

the estimated minimum income needed to support a family

Answer 37

Poverty Threshold

Question 38

the ability of people to raise their standard of living and improve their economic status

Answer 38

Economic Mobility

Question 39

a policy designed to reduce income inequality by taking money from the rich and distributing it to the poor

Answer 39

Income Redistribuation

Question 40

a government benefit in the form of goods or vouchers, such as food stamps and public housing

Answer 40

In-Kind Transfers

Question 41

a tax reduction given to low-wage workers when they file their federal income tax forms; its goal is to raise the incomes of poor people without discouraging them from working

Answer 41

Earned Income Tax Credit

Question 42

a government program providing limited cash payments to workers who lose their jobs

Answer 42

Unemployment Insurance

Question 43

a government benefit that is tied to family income so that benefits are reduced as income rises; examples include food stamps and welfare payments

Answer 43

Means-Tested Programs