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Final Project (Chapter 7 (Externalities: Side effects to an economic…
Final Project
Chapter 7
Externalities: Side effects to an economic decision. These affect other parties. These are not reflected in the costs of a company.
Monopoly: When one company controls its market.
Monopolies are mostly illegal.
It's etymological meaning is "One seller."
Duopoly: When two companies control their market. The United States has a political duopoly. They typically have an "us versus them" type of thought process.
Public goods: Services or items that are available to everyone. Fresh air is considered a public good. These goods can also be overused, causing negative externalities.
Durable Goods and Non-durable goods: Durable goods are not immediately used, and last for a period of time. Non-durable goods are immediately consumed and don't last. Food is a non-durable good. A durable good is an item of furniture, or a car.
Price Discrimination: The act of selling the same products at different prices to different people. You can also be guilty of price discrimination if you sell your product at the highest price possible. The time of purchase can be an example of this if the price changes at different times.
Antitrust Laws: Laws that regulate corporations. If these are violated, you commit a white collar crime. The three main Antitrust acts are the Sherman Antitrust Act, the Clayton Act, and the Federal Trade Commission Act.
Chapter 11
Gold Standard: The value of currency defined in terms of gold. The U.S. had its first experience with this in the 1870's. Britain departed from the gold standard in 1931 .
Commodity Standard: The value of currency is dependent on a fixed exchange rate between money and goods. This determines the exchange rate between countries
Fiat Money: Money from the government that can't be converted. Fiat money can be used as currency. Most of our money nowadays is fiat money.
Chapter 15
Federal Reserve System: The main bank of the United States. It influences the amount of money circulating in the economy. It influences employment, prices, and economic growth.
Discount Rate: Used for loans between private banks. It takes the time value into account. The greater the uncertainty, the greater the discount.
Prime Rate: The lowest rate that money can be borrowed commercially. This is the rate of loans. It's used for most credit cards, home equity loans and lines of credit, auto loans, and personal loans.
Monetary Policy: The policy created by the central bank. It manages money supply and interest rate. It tries to encourage economic growth.
Fiscal Policy: How the government adjusts their spending. This is the partner of monetary policy. This replaces laissez-faire in the U.S.
Chapter 17
Misery Index: The average of how each citizen is doing economically. This is done by adding the seasonal unemployment rate to the yearly inflation rate. This was created by Arthur Okun
Advantages of International Trade: We can sell something we don’t need or have made specifically for trade. We can buy things that we need.
Trading also creates jobs
Disadvantages of International Trading: Local Farmers can't just grow for their families and themselves. People's cultures are exported along with the products. Maintaining safety regulations can be difficult.
Globalization: Free trade with other nations. This also causes the trading of world views and cultures. The internet increased globalization.
Protectionism: Protecting a country through import taxes. This also involves trading between states. Protectionists want to decrease trade deficit.
NAFTA: Trade agreement between the US, Mexico and Canada. Its full title is "The North American Free Trade Agreement. This was negotiated in January 2008.
Collectivization: Policy meant to reduce the food crisis in the Soviet Union. This was implemented by Stalin. This was also meant to increase peasant labor productivity.
Privatization: The change from a public business to a private one. There are five main methods of privatization. Some of these transactions are a form of secured loans.
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