Card Set Information
Chapter 7: Power and the Economic Order
Define automatic stabilizers.
government programs that act to counter economic cycles
Define capital market.
decisions of lenders and borrowers to make and accept loans at specified interest rates (prices)
Define comparative advantage.
the argument that countries benefit most when they concentrate on producing the goods that they are most efficient at producing
Define constant dollars.
dollars valued from a particular year in order to account for changes in the value of dollars; that is, inflation
Define consumer demand.
preferences for goods and services, expressed by willingness to pay
Define corporate raiders.
investors who arrange to purchase stock in a hostile takeover effort
Define Council Economic Advisers.
advises the president on national economic policies
Define Economic Decision making.
markets: individually, through voluntary exchange governments: collectively,through coercion
Define Economic System.
institutions and processes by which society produces and distributes scarce resources
the study of the production and distribution of scarce resources
Define Employment Act of 1946
pledges the federal government to promote maximum employment, production, and purchasing power
Define federal deficits.
the annual negative imbalances that occur when the government spends more than it collects
Define The Federal Reserve Board.
organization that controls the supply of money and credit and interest rates (sets monetary policy)
Define fiscal policy.
effects of government taxing, spending, and deficits on the economy
Define GDP Gross Domestic Product.
total value of nation’s production of goods and services for a year
Define Gernal Agreement on Tariffs and Trade.
a multinational agreement covering trade relations among nations
Define hostile takeover.
the purchase of stock in a corporation by an outsider and the subsequent ousting of the prior management
increases in the general level of prices, not just prices of some products
Define labor market.
decisions of employers and employees to offer and accept jobs at specified wages (prices)
control of the corporation by professional managers rather than stockholders
Define marginal tax rates.
tax rates applied to additional income
arrangement that enables people to exchange money for goods, services, and labor
Define monetary policy.
government’s influence over the supply of money and credit and interest rates
Define Natioal Debt.
the accumulated debt of the U.S. government of over $6 trillion owed to purchasers of U.S. bonds
Define national income accounting.
data collected by government that describes the nation’s income and output
Define North America Trade Agreement.
an agreement in which the United States, Mexico, and Canada collaborated to eliminate all barriers to trade
Define per capita GDP.
gross domestic product divided by the population; a measure of economic well-being
allocate goods and services by willingness and ability to pay determined by consumer demand, product supply, and competition
Define principal-agent problem.
tendency for managers (agents) to operate firms to their own benefit rather than that of the owners (principals)
Define private economy system.
made up of private individuals in search of wages and profits, acting on their own, without government direction
monetary gains that motivate producers to satisfy consumer demand and to produce goods and services in the most efficient way possible
maintaining high tariffs in order to protect domestic producers rom foreign competition
Define supply-side economics.
government policies designed to increase the supply of goods and services through incentives to work, save, and produce
taxes on goods imported into a country
Define trade deficit.
the imbalance that results when a country imports more goods than it exports
Define underground economy.
economic activities that are unreported and not counted in GDP
Define Unemployment rate.
the percentage of the labor force not working but looking for work or waiting for a job to open
Define World Trade Organization.
an international organization that adjudicates trade disputes among countries and monitors and enforces trade agreements