Economic History Exam-Study Guide #4 (1929-Present)

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Supply-side economics

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a school of macroeconomics that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services as well as invest in capital.

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Say's law, or the law of Markets

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is the controversial assertion, found in classical economics, that aggregate production necessarily creates an equal quantity of aggregate demand. It was stated by the French economist Jean-Baptiste Say (1767–1832),

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Trickle-down economics

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are terms in United States politics to refer to the idea that tax breaks or other economic benefits provided to businesses and upper income levels will benefit poorer members of society by improving the economy as a whole.

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Keynesian economics

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is the view that in the short run, especially during recessions, economic output is strongly influenced by aggregate demand (total spending in the economy).

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Laffer Curve

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a supposed relationship between economic activity and the rate of taxation that suggests the existence of an optimum tax rate that maximizes tax revenue.

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Multiplier Effect

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An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

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Gross domestic income=GDP

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The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period - you can think of it as the size of the economy.

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GDP= C+I+G+(X-M)

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The size of a nation's economy is the total value of the spending on goods and services in the nation in a year. This spending occurs in the form of transactions within and between these three sectors.

where “C” equals spending by consumers,
“I” equals investment by businesses,
“G” equals government spending and
“(Ex - Im)” equals net exports, that is, the value of exports minus imports. Net exports may be negative.

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Fiscal and Monetary Policy

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(MP) is typically implemented by a central bank, while (FP)decisions are set by the national government. However, both monetary and fiscal policy may be used to influence the performance of the economy in the short run.

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Stagflation/ Twin Deficits

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occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in. This happened to a great extent during the 1970s, when world oil prices rose dramatically, fueling sharp inflation in developed countries. For these countries, including the U.S., stagnation increased the inflationary effects.

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GATT (General Agreements on Tariffs and Trade)

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Treaty organization affiliated with the United Nations whose purpose is to facilitate international trade. GATT was superseded by the WTO.

Purpose was to facilitate international trade

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Mixed economy

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an economic system combining private and public enterprise.

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Race to the Bottom

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The situation in which companies and countries try to compete with each other by cutting wages and living standards for workers, and the production of goods is moved to the place where the wages are lowest and the workers have the fewest rights

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Great Society Programs

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a set of domestic programs in the United States launched by President Lyndon B. Johnson in 1964-65. The main goal was the elimination of poverty and racial injustice.

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Bonus Army

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was the popular name of an assemblage of some 43,000 marchers—17,000 World War I veterans, their families, and affiliated groups—who gathered in Washington, D.C., in the spring and summer of 1932 to demand cash-payment redemption of their service certificates.

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Harlem Riots

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the first in New York City in the 20th Century, was the consequence of a lingering unemployment crisis and police brutality. At 2:30 p.m. on March 19, 1935, a 16-year-old black Puerto Rican boy named Lino Rivera stole a 10 cent penknife from the Kress Five and Ten store on 125th Street.

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New Deal

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a series of domestic programs enacted in the United States between 1933 and 1936, and a few that came later. They included both laws passed by Congress as well as presidential executive orders during the first term (1933–37) of President Franklin D. Roosevelt.

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Glass Steagall Act (Banking Act)

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passed by Congress in 1933 and prohibits commercial banks from engaging in the investment business. It was enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression.

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National Recovery Act

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was a law passed by the United States Congress in 1933 to authorize the President to regulate industry in an attempt to raise prices after severe deflation and stimulate economic recovery.

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SEC

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A government commission created by Congress to regulate the securities markets and protect investors. In addition to regulation and protection, it also monitors the corporate takeovers in the U.S.

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Social Security Act (1935)

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to provide for the general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemploymen

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National Labor relations act

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Congress enacted in 1935 to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.

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Stagnation and decline theories

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A prolonged period of little or no growth in the economy. Economic growth of less than 2 to 3% annually is considered stagnation. Periods of stagnation are also marked by high unemployment and involuntary part-time employment.

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Fair Labor Standards Act

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is a federal law which establishes minimum wage, overtime pay eligibility, record keeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.

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Globalization /GATT/WTO

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fill out later

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Graham Leach Bliley (1999)

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known as the Financial Services Modernization Act of 1999 and commonly pronounced ″glibba″, (Pub.L. 106–102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United States Congress (1999–2001).

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Crony Capitalism

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term describing an economy, that is a case of legal plunder, in which success in business depends on close relationships between business people and government officials.

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Principle agent problem

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Conflicts of interest and moral hazard issues that arise when a principal hires an agent to perform specific duties that are in the best interest of the principal but may be costly, or not in the best interests of the agent.