economic system in which private citizens own and use the factors of production in order to generate profits
Consumer Price Index
statistic that measures overall changes in price or inflation over time
desire, ability, and willingness to buy a product
a state of the economy with large numbers of unemployment, supply shortages, and excess capacity in manufacturing plants
relaxation of government regulation on industry
Federal Reserve System
privately owned, publicly controlled, central bank of the United States
Gross Domestic Product
the dollar amount of all final goods and services produced within a country's borders in a year
a rise in the general level of prices
the lowest legal wage that can be paid to most workers
any substance that serves as a medium of exchange, a measure of value, and a store of value
Standard of Living
the quality of life based on the possession of necessities and luxuries that make life easier, Usually expressed as Per Capita GDP
a tax on an imported product
alternatives that must be given up when one is chosen over another
people available for work who made a specific effort to find a job during the past month and who, during the most recent survey week, worked less than one hour for pay
2 Ways to Measure GDP
Production and Demand
One category of GDP measurement on the Production side. Cars, large appliances, etc
Non Durable Goods
One category of GDP measurement on the Production side. food, clothing
One category of GDP measurement on the Production side. Health care, legal, food service, teachers, etc Largest input to GDP on producers side.
One category of GDP measurement on the Production side. Buildings. Obviously.
One category of GDP measurement on the Demand side. Consumers buying stuff. 70% of GDP
One category of GDP measurement on the Demand side. Business buying new equipment. Very volatile.
One category of GDP measurement on the Demand side. Government buying final products. 10-20%
(Exports) - (Imports)
One category of GDP measurement on the Demand side. Positive numbers add to GDP
Per person. Used to compare GDP over time and against different nations.
GDP adjusted for inflation
What does GDP fail to account for ?
leisure time, the environment, commute times, crimes, disasters, health, value laden choices
4 Goals of Macro Economics
Economic Growth, Low Inflation, Low Unemployment, Sustainable Balance of Trade
2 Tools of Fiscal Policy
Fiscal Policy, Monetary Policy
government taxing and spending policies
government policies toward interest rates and the ease of getting credit, control of the money supply
An economic slowdown of the economy which results in rising unemployment, increased business failures, declining economic growth and higher personal bankruptcies. Shorter and less severe than a Depression.
A measure of output per hour of work, higher productivity means more pay for workers
an economic system in which the government owns and administers the means of production and manages the distribution of goods
a final stage of society in Marxist theory in which the state has withered away and economic goods are distributed equitably, private property is eliminated
Became legal with the 16th Amendment to the Constitution in 1913
Federal Reserve System
The country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates
Clayton Antitrust Act
Passed in 1914. Major anti-trust law. Prohibited certain practices that were considered harmful to consumers
Scientific management designed to improve the efficiency and productivity of workers. Named for Frederick Winslow Taylor.
Federal Trade Commission.Created in 1914 to prevent unfair methods of competition in commerce as part of the battle to "bust the trusts."
What were the transformative inventions that drove much of the growth in the 1920s?
Electricity, The Automobile
Labor Saving Devices
Refrigerators, vacuum cleaners, washing machines that became popular in the 1920s
New method of selling expensive goods by allowing consumers to pay for their purchases over time. Charged very high interest rates.
a drop in the over all level of prices. This hurt people who had borrowed money most of all.
New Deal reform. Securities and Exchange Commission--Regulates the stock market
New Deal reform. Old Age Pensions
New Deal reform. Federal Deposit Insurance Corp.
New Deal reform. Works Progress Administration. Gave jobs to the unemployed.
New Deal reform. Agricultural adjustment act. Tried to keep prices for farm products high. Also included school lunches and food stamps.
New Deal reform. National Recovery act. Set standard prices, wages, and work rules for many of the companies in the US. Declared unconstitutional.
New Deal reform. Part of Social Security bill originally. This has become the basic welfare program in the US.