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When 94% to 95% of the labor force is employed.
Full-employment
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Method to control inflation. What is the concept of the inflation-unemployment trade-off?
- When inflation is high usually unemployment is low and vice versa.
- The federal government , would rather tolerate the situation of high unemployment than high inflation which would affect the total population.
- Unemployment is the lesser of the two evils.
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Who was Adam Smith?
- He fathered the classical law of political economics. Free-market capitalist, Laissez-faire approach.
- "invisible hand" any interference by government with free competition is almost certain to be harmful.
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What are the 3 parts of the gross domestic product (GDP)?
- 1. Expenditures of government
- 2. all investments
- 3. personal consumption of all products and services
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What is communism?
Government/state owns all, and gives you what you need to live.
a theory or system of social organization based on theholding of all property in common, actual ownership beingascribed to the community as a whole or to the state.
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What is Capitalism?
It allows for the total exploitation of workers. No government control or laws.
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Mixed Capitalism
It regulates it by adding minimum wages, worker's rights to join unions and go on strikes.
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What is socialism?
promotes the collective ownership of the means of production.
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Fascism-dictatorship is?
a governmental system led by a dictator having complete power, forcibly suppressing opposition and criticism, regimenting all industry, commerce, etc., and emphasizing an aggressive nationalism and oftenracism.
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The U.S. is 4.3% of the world's _______?
population
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The US uses __% of the world's natural resources.
30%
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The US produces __% of the world's GDP.
23%
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The best way to compare living standards?
How much time people used in their labor to consume an item
How many minutes does someone have to work to consume a like item comparatively.
America works less than others.
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Causes of inflation.
- Easy credit- too much money chasing too few goods
- Monopolies- one producer of a product
- limited supply of natural resources (oil, gas, wheat)
- high wages, low productivity
- Government activity- raise taxes, cut
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Economic Indicators
- price of gold
- unemployment rate
- GNP growth
- auto sales
- consumer price index
- corporate profits
- investments
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Methods to fight inflation
- raise taxes- less spending by individuals
- cut government spending programs
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fight recession
- cut taxes- puts money back in pockets
- increase government spending for programs and projects
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What is the Federal Reserve System (the fed)?
A system composed of various bodies, organizations, and committees for regulating the U.S. money supply.
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What are the 3 basic tools the Federal Reserve system uses to regulate money supply?
- 1. Reserve requirment- amount of money a member bank must hold against its excess reserves.
- 2. discount rate- the interest rate the fed charges member banks to borrow money.
- 3. open-market operations- the fed's sale/purchase of securities (bonds)
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basic goals of the economy?
- Freedom- free marketplace
- efficiency- max output per unit input
- equity- fairness
- security- protection for the people, unemply comp, etc.
- stability- full employment of societies resources
- growth- sustained increases of GDP
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