American Heritage

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Adam Smith

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Father of Modern Economics, wrote the Wealth of Nations

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Mercantilism

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Economic theory that emphasized the importance of stockpiling gold and silver to the economic power of a nation.

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Command system

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Economic system in which the allocation of resources is heavily controlled by government instead of free market forces

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Navigation Acts

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Act that put regulations on trade in the colonies. All trades had to go through British or Colonial Merchants and be shipped in British or Colonial ships with the end goal to generate large exports from England.

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Capitalism

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Philosophy of a free market economy in which the government serves only to create an acceptable environment to make exchanges

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'The Wealth of Nations'

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Book written by Adam Smith.
Criticized mercantilism and proposed a free market
"invisible hand" determined prices

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Markets

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Divisions of the economy that specialize in certain goods or services

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Market Economy

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Economic model in which the forces of individual self-interest regulate the economy

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Exchange

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Trade Between two parties

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Role of Money

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Money facilitates exchange by functioning as a generally acceptable medium for exchange

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Coincidence of Wants

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When two parties each possess something desired by the other, promoting an exchange

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Specialization

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The economic practice of focusing resources on production of one or a few goods

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Perfect Competition

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when buyers and sellers have no influence on price and terms of exchange

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Collusion

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When sellers are conspiring to maintain a high price and avoid competing with one another

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Monopoly

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When one person or group captures enough market power to control or manipulate prices.
-lack of competition in a market

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Law of Supply

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As the price of a particular good or service rises, suppliers will produce more of that good or service.

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Law of Demand

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As the price of a particular good or service rises, individuals will buy less of that good or service.

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Role of Prices

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In a market economy, prices determine the quantity of goods supplied.

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Role of Profits

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In a market economy, as profits increase, the number of suppliers and resources for making that good will increase.

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Equilibrium price

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The price at which the amount demanded is equal to the amount supplied.

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Shortage

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When the amount demanded is greater than the amount supplied

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Surplus

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when the amount supplied is greater than the amount demanded

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The invisible hand

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Adam Smith's term for the natural self-regulation of a market economy driven by self-interest and efficiency.

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Laissez-faire

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Policy in which there is little or no interference with exchange, trade, or market prices by the government

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Taxation without representation

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Rallying cry of the colonists during the Revolutionary period because of the taxes placed on them by a parliament in which they had no representation.

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Tea Act

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Act that gave the British East India Company monopoly on tea in the colonies

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Boston Tea Party

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December 16, 1773, Colonists dumped 342 crates of British tea into the Boston harbor, in protest of Tea Act

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Continental Congress

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A body of representatives from the colonies who met to respond to England's Intolerable Acts.

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Oligarchy

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A form of government where most or all political power effectively rests with a small segment of society, Typically the most powerful.

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Republican Problem

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The question of how the benefits of self-government can be enjoyed without incurring its inherent problems

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Constitutional structure

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the nature and arrangement of mechanisms in a constitution that organize the government

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Constitutional drift

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when power in the government does not remain where it was originally placed

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Confederation

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Defensive alliance among sovereign equals

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State Sovereignty

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When ultimate political power resides in the state rather than the federal government

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Bicameral Legislature

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A legislature in which there are two separate divisions or houses

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Virginia Plan

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Plan presented during the Constitutional Convention in which each state would have proportional representation in the congress

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New jersey Plan

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Plan presented during the constitutional convention in which each state would have equal representation in the congress.

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The Great Compromise

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Compromise of the Virginia and New Jersey plans by having the upper congressional house representation equal by state and the lower house proportional by population

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Popular Sovereignty

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Idea that power is created by and subject to the will of the people.

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Federalism

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Dividing powers between the national and state governments

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Three-fifths compromise

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3/5 of the slaves were counted as part of state population for taxation and representation

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Auxiliary Precautions

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Structure in the government to make it more difficult for power to become concentrated in any one group's hands

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Indirect election

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When government officials are elected by previously chosen representatives and not directly by the people.

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Enumeration

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The written listing of the powers of government

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Separation of powers

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Dividing powers of government between the three branches

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Checks and Balances

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Bridging the separation of powers between branches of government by placing part of each power within two separate branches

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Faction

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a group of individuals who share the same specific political agenda

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Anti-Federalists

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Political group that was against the ratification of the Constitution

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Federalists

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Political group that was for the ratification of the constitution

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Natural RIghts

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Fundamental rights granted by nature that government can not abrogate and which government is bound to protect

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Civil rights

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Rights defined using narrow, concrete language, full of specific terms and qualifiers.

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The Great Oughts

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Natural rights that dont proclaim an "is" so much as an "ought" about the world--The way things should be

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Judicial Review

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Power of the supreme court to rule on the constitutionality of laws