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201 Cards in this Set

  • Front
  • Back
Reason for gains in population size and length of life
-economic growth
Basis for the poverty income level
-meeting basic needs
3 Determining factors for the success of a society
Source of economic gains during the 20th century
-availability, use, and ownership of new goods
Majority of income spent in the early half of the century
-on basic commodities
4 Reasons to study economics
-prepares you for the future
-provides you with a clear perspective on the forces of change
-a good understanding of the lessons of the past
-how analyzing policies impact the nation and you personally
Economy of communist nations
-command control central planning systems
3 characteristics of economies of free nations
-trade competition
-limited government
5 economic reasoning propositions
-choices matter
-costs matter
-incentives matter
-institutions matter
-evidence matters
5 Sources of productivity advance
-technology (knowledge)
-specialization and division of labor
-economics of scale
-organization and resource allocation
-human capital (education and health)
11 key institutional determinants that allow markets to form and strengthen
-the rule of law
-clear specification of property rights
-enforcement of contracts
-access to info and low transaction costs
-open competition with freedom of entry and exit
-access to capital
-mobility of inputs
-education and health
-political participation
-limited government
-individual freedom
3 things that gave permanent features to the English settlements in North America
-cash crops
-market production
Technological changes
-advances in knowledge that raise output or lower costs.
-both invention and/or modifications of new discoveries
What a societies institutions promote
-the ability or inability to access, adapt, and apply new technologies and the other sources of productivity advances
Chief occupation in the colonies
2 Determining factors in the path of development and particular economic activities in America
-abudance of land
-abudance of natural resources
How production was organized in the new world
-each region was specialized in the production of particular goods and services
Dominant agriculture during the colonial period and why
-southern agriculture because of the fertile new land
Why southern tobacco was important to the English
-they would not have to get it from the Spanish
2 advantages of tobacco production in the colonies
-as successive plantings exhausted the original fertility of a particular plot, new land was readily available
-ships could move up the rivers of the virginia coast to load their cargoes at plantation docks
Reason why large plantations became more efficient then small farms
-slaves were organized to work
Place that advanced agriculture appeared first
-the middle states
2 reasons that slaveholding was rare in the middle states
-wheat production was labor intensive only during planting and harvest periods
-there were no apparent economies of large scale production in wheat, corn or generalized farming
3 Reasons that commercial farming did not work in the north
-poor soils
-uneven terrain
-severe climate changes
Extractive pursuits
-when people earn their livelihood indirectly from the land
Primary fuel and basic construction material in colonial days
Only material of significant value in the colonies
Reason that the population moved inward during the colonial period
-rich rock ores were discovered
3 Reasons that manufacturing was discouraged in the colonies
-abundance of land
-abundance of natural resources
-sparse and scattered populations
2 Main concerns in the typical colonial household
Task that woman and children had in the colonies
-making food and clothing
Result of the navigation acts
-encouraged shipbuilding in the north and in England
2 most profitable things in the nation during colonial times
Population demographics of colonial America (4)
-family farmers (majority)
-indentured servants
-unskilled laborers
Job of children in colonial times
-apprentice type workers in home and fields
Definition of the navigation acts
-acts inhibiting the shipping of american products in dutch vessels. england did not enforce these acts properly.
3 Guidelines of navigation acts
-all trade in colonies was to be carried on english ships
-all foreign merchants were excluded from dealing directly with the colonies
-certain commodities could only be shipped to England
7 Top exports of colonial America
-bread and flour
3 Countries/regions that received colonial American exports from greatest to least
-southern Europe
-west indies
Intercolonial commerce
-each region in the colony dominated its own specific trade route in which commodies of its own were being exported (only on the coasts of the colonies)
History of commerce problems in colonial America
-america started out using commodities as money-then went to coinage, gold, silver, and paper currency:-the colonists used this money from other nations because there was no federal reserve yet or national currency
How banks were used in colonial times
-offered borrowers loan bills in which the individual was required to repay
Definition of currency act
-prohibited new england from establishing new public banks and from issuing paper money for private transactions
Definition of currency restraining act
-extended the provisions of the currency act
Reason why trade deficits occurred with england
-the availability of specie was decreasing, thus forcing the colonies to move to paper money
Franklin’s 2 solutions to the trade deficit with England
-could be paid back by the surpluses earned in trades
-could be paid back by earnings from shipping and other mercantile services
Way that the final remaining debt paid to Britain
-short term credit (instituted by the british)
Richest part of the colonies during the 1700’s
-the south
What the formation of capital in the colonies depended on
-steady accretion of savings-investment from the colonists themselves
Structure of the british crown colonies
-both the governments governor and council (upper house) were appointed by the british crown but only the lower house could initiate fiscal legislation, and this body was elected by the propertied adult males within the colony.
Who the control of civil affairs rested with in the colonies
-the colonists
Group that had to approve colonial laws
-privy council
3 Ways that the british used the navigation acts to run the colonies
-to protect and encourage english and colonial shipping
-to ensure that major colonial imports from europe were shipped from british ports
-to ensure that the bulk of desired colonial products
Definition of Molasses act
-parliament imposed heavy taxes on imported goods because imports that were not british were becoming cheaper (french) (colonists ignored it)
Definition of sugar act
-british taxed imports on non british products because of the debt after French and indian war
Definition of stamp act
-required that stamps varying in cost from half a penny to several pounds to be affixed to legal documents, contracts, newspapers and pamphlets, and even playing cards and dice
Definition of declaratory act
-affirmed the right of parliament to legislate in all matters concerning Americans
Definition of quartering act
-colonists had to allow british troops to quarter on their lands
Definition of tea act
– british tax placed on tea
2 Periods of conflict between 1776 and 1815
-peace and independence followed by war again (Napoleonic wars)
-americas second war with England
2 Causes and effects of conflicts between 1776 and 1815
-economic fluctuations and imposed (by foreign nations) significant shocks on americas economy
-while everybody else was in combat, america took advantage of the economic gap in trade and filled the void
Restraint by british on colonial economy in regards to foreign commerce
-british placed legal restrictions on american overseas commerce (forced nearly all american commerce to seize) (colonies engaged in trade illegally)
Result of imports and exports falling in the colonies
-colonies became more self sufficient
Positive of the articles of confederation
-source of early political agreement among the colonies
3 Negatives of the articles of confederation
-power to tax was left to individual states
-national gov't appeared too weak to negotiate improvements in its economic or military relations.
-various forms of paper money for each state caused inflation
2 arguments on how early american government should play a roll
-weak central government like the articles provide so that states could have a lot of fortune
-strong central government, with the power to coerce states, should be applied
2 Financial positives of the constitution
-power to tax deligated to federal government
-government had right to mint coins and regulate money supply
Arguments to the financial positives of the constitution
-conflicting factions-limits on majority rule-ability to redistribute wealth and income by governmental means
Definition of 5th amendment
-gov't cant take land without reasonable compensation
Definition of the great constitutional compromise
-each state was ordered to recognize the laws and court orders of other states-slaves are property and are to be counted at 3/5 of a citizen
Definition of 10th amendment
-states can impose laws like licensing, regulation of business, taxes, zoning laws, civil conduct, and the use of police powers to enforce them
Theory of adam smith
-economic order, directed by self-interest, that limited governmental rules and regulations but ensured the domestic tranquility and freedom from foreign interface that only a strong central government could provide
2 Restrictions to american trade post revolution
-excluded to trade within the british empire
-spain put restrictions on too
Positive to the restrictions put on by spain and britian post revolution
-goods that previously had been enumerated could now be traded directly to continental european ports
Invention that caused cotton production to take off
-cotton gin
Jefferson’s 3 major goals
-to provide revenues to the federal government through sales and not through taxes
-to spread democratic institutions
-to ensure the clear properties of an individual
How the federal government would handle the new lands out west
-they would acquire it then sell it to citizens (national acquisition of new land came either by conquest, treaty, or purchase)
2 major land systems of the colonial period
-new england system of township planning (provided for laying out townships, for the subdivision of townships into carefully surveyed districts {townships were generally 6 square miles})
-the system of townships used in the south was not as organized and land was first come first serve
2 definitions of northwest land ordinance of 1785
-lands in the northwest were to be carved up like rectangles
-forbade slavery in the northwest territory
2 Theories of dealing with new land
-conservative theory: in favor of selling large pieces of public lands for high prices in cash
-liberal theory: in favor of putting land within reach of almost everyone and selling it in small pieces for relatively cheap prices
Major point implied by the northwest land ordinance in regards to earning capital
-public lands should be a major source of revenue
7 Groups of people that the public lands drew out west
-people from northern Europe
-irish (potato famine)
2 commodities that drew people to the west
5 Inventions that helped cotton production in the south
-steam engine
-spinning jenny-water frame
-spinning mule
-power loom
-cotton gin
Instance that prompted the far west migration
-gold rush
Problem with the gold rush
-there were no land rights to these new lands and government could not enforce order
2 instances of Work and life before 1860
-most of the population lived in rural areas
-most workers were self-employed on farms and in craft shops
Definition of monetary wages
-wages adjusted for the cost of living
4 ways that living standards changed during the early industrial period
-monetary wages rose
-unskilled workers made as much as skilled workers because of the immigration of unskilled workers
-many workers dismissed self
-employment and started working for an employer
Reason why the population in the us grew rapidly during the first half of the 1800's
-both the rate of natural increase and rate of immigration were high
3 hypothesis's to explain the increasing rate of fertility (mortality rates were also high)
-as cost of land and population rose, parents wanted to have smaller families to raise their kids
-the rise of non farming positions in rural areas made farmers force their children to stay home and work on the farm
-growth of urbanization, industrialization, and literacy played a role
2 reasons for population growth
-high birthrate
2 reasons that the markets became more advanced
-companies specialized in specific products and put emphasis on quality control (diminished the role of the general laborer and created specialists)
-women and children were put to work in the factories
2 ways of solving employment problems in textile industry (mill and factory)
-rhode island system - hired whole families, assigning each member of the family to a specific task
-waltham system - woman in their late teens and earily 20's were placed in dorms at a factory to work (problem: low female-to-male wage ratio)
Reasonable work day during mid 1800’s
-12 hours a day, 72 hours a week
Jobs for women mid 1800’s
-cotton textile industry
Result in the improvements of transportation
-made markets more competitive
Effect that immigrants had on wages
-made them lower because they bought new lands
Difference between wealth distribution in the north and the south
-wealth distribution was more even in the north
Reason that growing activities by workers to organize for their benefits (mostly in major cities) started to grow
-the number of workers in manufacturing grew
3 Reasons for early unions(workingmen's societies)
-increase real wages-shorter work hours
-to establish and maintain a closed shop
-to regulate the conditions of apprenticeship
3 Effects of cyclical economic downturns in mid 1800’s
-dissolved worker collective actions
-wage reductions
-court actions (conservative judges made union action perse illegal)
2 organizational advances that workingmen’s unions established
-labor learned how to collectively bargain with their employers (ex: closed shop - an agreement whereby membership in a recognized union is made a condition of employment)
-the rapidly increasing number of individual societies began to coalesce (local federations and then national organizations appeared)
4 Political gains for the common working people in the days of the early unions
-public education (public schools were most prevalent in the north, where political concern and efforts were greatest)
-ppl could now choose between military service and jail for being in debt
-the 10-hour day
Basis of the national dollar
-based on decimal system
Definition of Coinage act of 1792
-bimetallic standard was adopted (gold and silver coins in use)
Definition of gresham’s law
-money overvalued at the mint tends to drive out of circulation money undervalued at the mint, providing that the two monies circulate at fixed ratio
Argument to gresham’s law
-if people are willing to use coins at their market values, there would be no reason for one coin to drive another out of circulation
Why the bimetallic standard was good
-the cheaper metal could replace the dear metal
2 problems with bank notes
Man who established the first American bank
-Robert morris
4 reasons why Alexander hamilton’s proposal of a national bank would be good
-the bank could give the government assistance by lending money to the US treasury
-could serve as a fiscal agent for the gov by acting as a depository of government funds (making transfers from one part of the country to another
-serving as a tax collection agency
-gov and private shareholders would run the bank, therefore creating a unity between government and leading businessmen
3 Oppositions to hamilton’s idea of a national bank
-it was unconstitutional
-it would create a money
-it would be of value to the commercial north but not the agricultural south
4 negative theories of the what a national bank would do
-it was unconstitutional
-it would create a money
-it would be of value to the commercial north but not the agricultural south
Advantage of the second national banks that other banks did not have
-lended to business firms
Reason that the confidence in paper money was continuously lost
-economic crisis (depression, etc)
3 Types of banking rules that states created
-some states prohibited banking
-some established state banking
-some prohibited free banking
Definition of Suffolk system
-presented country banks with their notes in volume, those forcing them to hold higher reserves of specie
Definition of safety fund act
-required new banks and those being rechartered to hold 3 percent of their capital in a fund to be used as reserves for banks that failed
Definition of free banking law
-required the banks to deposit bonds with the state banking authority
Definition of forstall system
-required banks to keep a specie reserve (1/3 of their combined note and deposit liabilities)
4 Factors that effected relative prices during the gold rush
-good or bad harvests
-technological progress
-changes in consumer tastes
-monetary expansion
How a slave’s maintenance cost was determined
-in excess of the value of his or her services (they would pay for themselves and eventually exceed and the owner would make profit)
3 time periods that slaves moved out of the south
-after war of 1812
-mid 1830's
-early 1850's
2 opinions on why slavery was economically inefficient
-africans are far less adapted for steady, uninterrupted labor than whites
-white laborers of equal intellegence will produce more output than Africans
3 Divisions of slavery in planting
-first class: the best hands, embracing good judgement and quick motion
-second class: those of the weakest and most inefficient class
-third class: hoe hands
Way that the profitable exploitation of slave labor was sped up
-greater forced work intensity
2 Reasons that slavery slowed the south from industrializing
-little structural change
-little immigration
Political and moral concern about slavery
-people were interested in containment of slavery, not its eradication
Definition of the dred scott decision
-congress can not prohibit slavery in the new territories
4 Reasons that the north was against slavery
-moral/ethical code
-farmers in the north feared competition with plantations if slavery spread
-vast sum of immigrants in the north were against slavery
-the republican party formed in the mid 1850's and wanted to shift the economy away from slavery
Root cause of the civil war
2 Groups of people left out of reconstruction in the former confederacy
-poor whites
-former slaves
Result of the civil war on the north
-spurred northern industrial expansion
2 points of the beard-hacker thesis
-the transfer of political power was from southern agrarians to northern industrial capitalists (ex: created national banking)
-emphasized hat the war simulated the economy and increased investment
Reason that the economy was so bad in the south after the way
-decline in southern output during and after the war
3 Reasons for decline in the deep south
-the plantation system was destroyed
-the withdrawal of labor from the fields, especially labor by women and children
-demand for southern cottons slowed because of competition from other slave countries
4 inequalities of both sides in the civil war
-many people in north with discontent with draft
-prices rose more rapidly then wages in the north
-you were exempt from draft in the south if u had 20 slaves or man
-both sides allowed for conscripts to allow draftees to buy their way out
Jobs of African Americans in the south between the civil war and 1910
-southern agriculture
Definition of sharecropping
-instead of paying a fixed annual sum in dollars for the use of the land, the share cropper split the crop with the land owner after the harvest
Overall reason that industrialization in the south was slower
-growing demand for labor in the north allowed blacks to escape from tenant farming
Definition of black codes/jim crow laws
-segregated blacks and maintained their impoverishment (result was striking wage gap between north and south)
Definition of plessy vs ferguson
-seperate but equal (black and white school)… the reality was that more money was spent on white students than black students
3 ways to get out west before the train
-wagon trains
-boat to panama and hike across, then boat back up north
-boat all the way around south America
Way the building of railroads were financed
-borrowed money
2 Reasons for sudden rapid growth of railroads
-additional gains from economies of scale operation, accounting for nearly half of the productivity advance of railroads at that time
-technical innovations on trains
Definition of schumpeter’s thesis
-the railroads were built ahead of demand
How the government helped build the railroads
-gave lands away to the railroads to help settle and build tracks in the west(congress required compensation {carry their cargo, military, etc})
How government responded to price discrimination
-government regulation
Definition of granger laws
-prohibited railroads from charging short shippers more than their fair share of the cost
Opposition to the granger laws
-violation of the 5th amendment, prohibiting the taking of private property without just compensation (restricting their earnings and deprived their properties of value)
4 Duties of the interstate commerce commission
-examine the business of railroads
-hearing complaints that arose from possible violations of the act and was empowered to issue 'cease and desist' orders if unlawful practices were discovered
-require railroads to submit annual reports based on a uniform system of accounts
-submit to congress annual reports of its own operations
Definition of elkins act
-made any departure from a published rate a misdemeanor and authorized the courts to enjoin rail roads from continuing to depart from published rates and making unlawful discriminations
Definition of Hepburn act
-extended the ICC to various kinds of different trains
Reason why the construction of the railroads was not really a big deal
-they only accounted for 2 years of growth
Chief generator of income before the 1880’s
Definition of price discrimination
-high freight carriers would give discounted rates to customers who would send a lot of shit a long distance and people who would go short distances would be charged high
Economic justification for discrimination
-the railroad may have been able to increase its total output and lower its costs
Advances that contributed to most of the industrial revolution
-technology advances
3 Previous sources of energy before the industrial revolution
-human and animal exertion
4 New sources of energy during/after the industrial revolution
2 relatively new economic ideas after civil war
-mass production
-scientific management
2 things that early business combinations were based on
-gentlemen’s agreements (usually used for setting and maintaining prices)
-pooling - dividing a market and assigning each seller a portion (both were temporary because of the temptation to cheat without legal restriction)
Result of the lack of trust that pooling and gentlemen’s agreements brought
-trust and holding companies were created to hold shares from the companies that made agreements as collateral
2 phases of the concentration movement (to big business)
-horizontal mergers (1879-1893): combining of firms that produce identical or similar products to protect themselves
-vertical mergers (1898-1904): large companies ate up small companies and used them as one, with each former company as its own division
Definition of Sherman anti-trust act
-illegal for companies to monopolize
Definition of clayton act
-intended to remove ambiguities in existing antitrust law by making certain specific practices illegal (ex: price discrimination among buyers)(enforced by federal trade commission)
4 reasons that the demand for labor grew between the civil war and ww1
-natural increase
-capital accumulation
-technological and other productivity advances in industry, agriculture, and the service sector
3 ways that major cities helped the health of citizens
-provide piped water
-filtration and chlorination of water-sewer systems
-public health administration
2 reasons that the new immigrants replaced the old ones
-economic opportunity grew in england, germany, and scandanavia, thus making america less attractive
-rapid improvement in transportation... the steamship gave the ability for south eastern europeans to get here easier
2 New opportunities for women in the industrial revolution
-sale work in city stores
-professional work (teaching)
Reason for the decline in children employment
-various advocates (religious groups and trade unions) worked to obtain protective legislation at the state level
2 federations of the AFL (american federation of labor)(took control of most union workers and had)
-the federation of organized trades
-labor unions (printers, glassworkers, iron and steel workers, welders, cigar makers, etc)
2 Comparisons between labor unions in US and in Europe
-in US, no labor party rose as a political entity
-labor unions were seldom united in their stand on political issues
2 Gains of the labor unions
-real wages had risen
-hours were shorter-laborers, children, and women were protected by law
Truth about the effect of the unions
-as a whole, the labor unions owed more to economic growth and rising productivity than the unions strengths
2 issues of controversy over the american monetary system between the civil war and ww1
-banking panics
Benefit of having a currency that could be converted to a fixed weight of gold
-fixed exchange rates and confidence in the long run value of money
Bad outcome of having a currency that could be converted to a fixed weight of gold
-difficult to adjust the money supply in response to adverse trends in prices or income
Evidences of deflation
-banks closed-factories and railroads went bankrupt-millions lost their jobs
Definition of coxey’s army
-many unemployed arrived in washington to demand federal relief (result: government provided aid to the unemployed)
2 problems that greenbacks solved
-providing additional revenue for the government during the war
-providing a currency of uniform value throughout the country
Reason that state banking ultimately became successful
-state banks could issue deposits rather then bank notes
3 types of money standards after the civil war
-dollar relative to weight of gold
What currency was like before the civil war
-primarily determined by flows of specie (money in the form of coins) into an out of the country through foreign trade and flows from us mines
5 reasons why going back to the gold standard was difficult
-prices in the united states had risen substantially during the war relative to prices in britain
-the price of the british pound had risen
-the large gap of exchange rate between the dollar and the pound would cause americans to convert their dollars to gold, and then convert their gold to pounds to get relatively cheaper prices in america
-debtors would suffer from inflation
-workers would suffer from unemployment
3 Opposing arguments to why we should have gone back to the gold standard
-it was only fair that creditors, especially those who have lent to the government, be paid in gold
-to leave monetary policy based on paper money could be open to abuse by the government (because they are creating it)
-maintain the credibility of the united states to foreign markets by keeping the gold standard
Definition of dual banking system
-state and national banks
way that the treasury could take care of inflation that greenbacks promoted
-they could force down surplus rather quickly by destroying much of the greenbacks as they came in (contraction act)
Reason why prices fell post civil war
-demand for money grew faster than supply
Definition of gold act of 1900
-american dollar was specifically based on the weight of gold
3 ways that national banks were protected from other banks
-high capital requirements of national banks
-restrictions on mortgage loans
-limits on amount of notes issued
How rural banks helped finance urban growth
-rural banks price discriminated by restricting loans and charging higher interest rates to local borrowers and then rural national banks sent their reserves to city banks
3 reasons that rural banks created regional differences in lending rates
-the recovery of the southern financial system brough rates in that region in line with those in other regions
-the spread of commerical paper market (short term business loans were sold directly to private investors) privided additional competition for state banks
-free banking in a number of states increased competition among the state banks
Comparison between American and british banks
-american banks were under more restrictions
3 results of investment banking
-financed building of railroads
-financed mining companies
-financed large scale manufacturers
Difference in investment banks from commercial banks
-did not have the power to create notes or create deposits (they acted as intermediaries, bringing together lenders and borrowers)
Group that preferred investment banks
-big business
Force behind economic growth
-steady retirement of national debt (collection of tariffs supplied government with continuous surplus)
Definition of Federal Reserve act
-created Federal Reserve