Download Final Exam Study Guide Answer Key

Final Exam Study Guide Answer Key
Section 1: Foundations of American Political System
1. Describe the economic system of the New England colonies.
Shipbuilding and fishing
2. What is the economic system that is based upon a country exporting more goods than it imports?
Mercantilism
3. Why didn’t the colonists approve of mercantilism?
They felt it exploited (took advantage of) them.
4. Explain the triangular trade route.
Trade route in which rum from North America was traded for slaves in Africa. The slaves were then traded for
sugar and molasses in the West Indies and then traded in North America for more rum.
5. What role did town meetings play in the New England colonies?
Town meetings were a type of direct democracy in New England. All men could discuss issues and then all land
owning men voted.
6. What is the Magna Carta?
An English document signed in 1215 that limited the power of the British monarch.
7. What is common law?
A system of law based on accepted customs, traditions, and past decisions.
8. Explain the significance of the Mayflower Compact.
The Mayflower Compact established the idea of direct democracy in the colonies and led to self-government in
the new world.
9. Explain the significance of the Virginia House of Burgesses.
The Virginia House of Burgesses was the first example of representative democracy in the colonies and led to
the idea of self-government.
10. Which philosopher discussed the theory of natural rights?
John Locke
11. What are natural rights?
The rights of life, liberty, and property.
12. Explain the significance of the English Bill of Rights.
Further limited the power of the British monarch and became one of the sources of ideas for our new nation.
13. Describe the Albany Plan of Union and the political cartoon “Join or Die.”
Called for all of the colonies to unite against the British prior to the Revolutionary War.
14. Explain the relationship between the Tea Act and the Boston Tea Party.
The Boston Tea Party was a response to the Tea Act
15. What is the Declaration of Independence?
A document written by Thomas Jefferson during the Second Continental Congress that listed the abuses of King
George III and formally declared independence from Britain
16. What is the significance of Thomas Paine and his pamphlet Common Sense?
Common Sense encouraged many colonists that were undecided on the topic of independence to become
patriots and support the fight for independence
17. Describe the Navigation Acts.
The Navigation Acts required colonists to only transport goods on British ships and eliminated all free exchange
with other nations.
18. Explain the significance of the Northwest Ordinance of 1787.
It set up a way to settle the land west of the Appalachian Mountains by making a PROCEDURE TO ADMIT NEW
STATES INTO THE UNION.
19. What was Shays’ Rebellion and assess its importance in the new nation.
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Shay’s Rebellion was an uprising of farmers who were losing their farms due to the rising debts. It showed that
the Articles of Confederation were not an effective form of government and that changes needed to be made,
leading to the convening of the Constitutional Convention.
Explain the Great Compromise and its importance in creating the Constitution of the new nation.
The Great Compromise, or The Connecticut Compromise was a compromise between the Virginia and New
Jersey Plans. It provided for a bicameral legislature, with one house to be based on population and one house
based on equal representation. There would be a single chief executive and a Supreme Court in additional to
other federal courts. These compromises needed to be made in order to have the Constitutional Convention
move forward.
Who were Federalists?
Supporters of the Constitution.
Who were Anti-Federalists?
People that felt that the Constitution made the national government too powerful and that a Bill of Rights
needed to be added to protect the rights of the people from the government.
What is the constitutional principle of power being divided between the legislative, executive, and judicial
branches?
Separation of powers
What is an example of checks and balances?
Presidential veto
What constitutional principle is the idea of philosopher Montesquieu?
Separation of powers
What is the relationship between the 5th, 6th, and 8th Amendments?
Rights of the accused
What was the first constitution of the United States?
Articles of Confederation
What term best describes a government in which the citizens elect representatives to act for them?
Representative democracy/ democratic republic
Which term that best describes the American form of government?
Democratic republic
What type of government does Cuba have?
dictatorship
What is the absence of any centralized government or authority called?
anarchy
What was the purpose of the Federalist Papers?
To persuade citizens to ratify the Constitution
What was the purpose of the Anti-Federalists Papers?
To persuade citizens to not ratify the Constitution
What were the problems with the Articles of Confederation?
Economic disorganization: (1) Congress could not regulate trade (2) No uniform system of currency (3) No power
of taxation
Lack of central leadership: (1) No independent judiciary (2) No foreign affairs head (3) Inability to deal with
internal and external threats
Legislative inefficiencies: (1) Each state had one vote (2) Difficulty passing laws (3) Impractical amendment
process
What is the Social Contract Theory?
The agreement with which a person enters into civil society. The contract essentially binds people into a
community that exists for mutual preservation. In entering into civil society, people sacrifice the physical
freedom of being able to do whatever they please, but they gain the civil freedom of being able to think and act
rationally and morally.
36. What is the significance of the following people: Pilgrims, Puritans, Quakers, John Smith (Jamestown), Roger
Williams (RI), William Penn (PA), Anne Hutchinson, John Rolfe (VA), Lord Baltimore (MD), James Ogelthorpe
(GA), John Locke, Sons of Liberty, John Peter Zenger (trial – freedom of the press), King George III, Paul Revere,
Samuel Adams, George Washington, Thomas Jefferson,
Section 2: U.S Constitution and Amendments
1. What is located in the middle of the Preamble to the Constitution?
The six purposes for the new government.
2. What is popular sovereignty?
People have the power, or consent of the governed
3. What is federalism?
The power is shared between the federal government and the 50 states
4. What is separation of powers?
The idea that limits the power of the individuals, by creating three branches of government.
5. What are checks and balances?
That each of the three branches can limit the power of the other two.
6. What is another name for the elastic clause?
The necessary and proper clause
7. What does the necessary and proper clause do?
It expands the power of Congress by giving them implied powers in order to carry out their duties listed in the
Constitution
8. What are Congress’s expressed powers?
Coin money, declare war, keep and maintain an army, regulate trade, approve treaties with foreign
governments
9. What are implied powers?
Those powers not specifically listed in the Constitution
10. What Supreme Court case upheld implied powers?
McCulloch v. Maryland
11. What is the Supremacy clause?
The Constitution is the highest law of the land
12. What are some examples of reserved powers?
Conduct elections, establish local governments, and to create public schools
13. What is a bicameral legislature?
It is made up of two houses or chambers
14. What are the two houses of Congress?
House of Representatives and Senate
15. What house of Congress is responsible for confirming all appointments including federal judges, ambassadors,
and cabinet members?
Senate
16. What is a bill?
A proposed idea that has not been signed into law
17. Who persuades Congressmen and Congresswomen to pass legislation that their interest group supports?
A lobbyist
18. What are major steps in a bill becoming a law?
~Introducing a bill to the House or Senate
~bill is sent to committee
~committee conducts research
~committee sends bill to floor
~the entire house votes after listening to debate
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~the bill goes to the other house
~the bill is sent to the President
Which branch of government can declare war?
Legislative (Congress)
What does the Constitution state that the President must give at least once a year?
The State of the Union Address
What is original jurisdiction?
When a verdict is decided, there is a trial and witnesses testify
What is appellate jurisdiction?
A verdict is not decided, instead it is only determined if the law was applied correctly
What is concurrent jurisdiction?
When both a state and a federal government have the authority to hear a case.
What is exclusive jurisdiction?
When only the federal OR the state government can hear the case
What is a writ of habeas corpus?
When a person is told what charges they have against them
Can writs of habeas corpus be suspended?
No, a person must always be told what they are being charged with according to the Constitution
What is a bill of attainder?
A bill of attainder is when a person is convicted without a trial
What are some limits that the Constitution places on Congress?
No bills of attainder, no ex post facto laws, no writs of habeas corpus, no titles of nobility can be given
What articles of the Constitution talk about the three branches of government?
Articles I, II, and III
What is judicial review?
That the Supreme Court can find acts of the President or laws unconstitutional
What Supreme Court case determined judicial review?
Marbury v. Madison
What is a veto?
When the President refuses to sign a bill into law
What is a veto an example of?
Checks and balances
What is a line item veto?
When the President could only line out a certain sentence or part of a bill. He does not have that ability.
What are the two bodies that propose an amendment?
Congress or a National Convention of the states
If Congress proposes an amendment, who must pass it?
¾ of the states at a National Convention
If the States propose an amendment at a National Convention, who must pass it?
¾ of Congress
What amendment states that equal protection under the law belongs to all citizens?
14th Amendment
Which amendments protect the rights of someone accused of a crime?
5th, 6th, and 8th
Why doesn’t the Constitution allow the President to be elected by the popular vote of the people?
The Founders felt that the average person was not educated enough on the issues to choose wisely
Describe each (1-10) of the first ten amendments of the U.S. Constitution.
1. The United States Congress can't make any law about your religion, or stop you from practicing your
religion, or keep you from saying whatever you want, or publishing whatever you want (like in a newspaper
or a book). And Congress can't stop you from meeting peacefully for a demonstration to ask the government
to change something.
2. Congress can't stop people from having and carrying weapons, because we need to be able to defend
ourselves.
3. You don't have to let soldiers live in your house, except if there is a war, and even then only if the United
States Congress has passed a law about it.
4. Nobody can search your body, or your house, or your papers and things, unless they can prove to a judge
that they have a good reason to think you have committed a crime.
5. You can't be tried for any serious crime without a Grand Jury meeting first to decide whether there's enough
evidence for a trial. And if the jury decides you are innocent, the government can't try again with another
jury. You don't have to say anything at your trial. You can't be killed, or put in jail, or fined, unless you were
convicted of a crime by a jury. And the government can't take your house or your farm or anything that is
yours, unless the government pays for it.
6. If you're arrested, you have a right to have your trial pretty soon, and the government can't keep you in jail
without trying you. The trial has to be public, so everyone knows what is happening. The case has to be
decided by a jury of ordinary people from your area. You have the right to know what you are accused of, to
see and hear the people who are witnesses against you, to have the government help you get witnesses on
your side, and you have the right to a lawyer to help you.
7. You also have the right to a jury when it is a civil case (a law case between two people rather than between
you and the government).
8. The government can't make you pay more than is reasonable in bail or in fines, and the government can't
order you to have cruel or unusual punishments (like torture) even if you are convicted of a crime.
9. Just because these rights are listed in the Constitution doesn't mean that you don't have other rights too.
10. Anything that the Constitution doesn't say that Congress can do should be left up to the states, or to the
people.
42. Explain each of the following constitutional amendments: 13th, 14th, 15th, 18th, 19th, 21st, 24th, and 26th.
The 13th Amendment abolished slavery in the United States.
The 14th Amendment ensured that all citizens of all states had not only rights on the federal level, but on the
state level, too. It removed the three-fifths counting of slaves in the census. It ensured that the United States
would not pay the debts of rebellious states.
The 15th Amendment ensures that race cannot be used as criteria for voting.
The 18th Amendment abolished the sale or manufacture of alcohol in the United States. This amendment was
later repealed (taken back/erased).
The 19th Amendment ensures that gender cannot be used as criteria for voting. Simply said: women can now
vote.
The 21st Amendment repealed the 18th Amendment.
The 24th Amendment ensured that no tax could be charged to vote for any federal office.
The 26th Amendment guarantees that any person 18 or over may vote.
Section 3: Judicial System and Supreme Court Cases
1. What was the first written code of law?
Code of Hammurabi
2. What was English common law?
The tradition of following earlier court decisions
3. What was the purpose of the Magna Carta?
It limited power of the English monarch and protected the right to have due process of law
4. What is Draconian Law?
The first written laws of Athens that have a very liberal use of the death penalty
5. What is the significance of the U.S. Constitution as a foundation of our legal system?
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It is the supreme law of the land
What is the adversarial process?
Two lawyers in a courtroom from opposing sides trying to present their stronger cases
What is administrative law?
Involves all rules and regulations that government agencies of the executive branch must issue to carry out their
jobs
What is original jurisdiction?
A court’s authority to hear and decide a matter before any other court can review the matter.
What is appellate jurisdiction?
A court’s authority to review or revise a lower court’s decision.
What is concurrent jurisdiction?
When both a state and a federal government have the authority to hear a case
What is exclusive jurisdiction?
A court’s authority to judge on a matter that no other court can judge on.
What does due process of law mean?
The government must treat all people equally and go through the proper steps when someone is accused of a
crime
In what types of cases does the federal government have jurisdiction?
The subject of the case deals with the interpretation of the U.S. Constitution or involves more than one state.
What amendments protect the rights of someone who is accused of a crime?
5, 6, and 8
What amendment states that equal protection under the law belongs to all citizens?
14th Amendment
What did the Supreme Court decide in the case Gregg v. Georgia?
The Supreme Court decided that the death penalty is not cruel and unusual punishment if it is used in a murder
case where there are extreme or mitigating circumstances.
What did the Supreme Court decide in the case Gideon v. Wainwright?
The Supreme Court decided that a person must be given an attorney in a felony case if they cannot afford one.
What did the Supreme Court decide in the case New Jersey v. T.L.O.?
The Supreme Court decided that a student can be searched at school without a warrant.
What did the Supreme Court decide in the case Tinker v. Des Moines?
Students can wear armbands to protest the Vietnam War as freedom of speech per the Constitution
What did the Supreme Court decide in the case Texas v. Johnson?
A person has the right to burn the flag as a form of protest.
What right does the case Texas v. Johnson expand?
Free Speech
What did the Supreme Court decide in the case Engel v. Vitale?
Prayer in school cannot be organized by the teacher or administrator
What did the Supreme Court decide in the case Miranda v. Arizona?
People must be informed of their rights when they are accused of a crime
What did the Supreme Court decide in the case Mapp v. Ohio?
Police must have a search warrant that is specific and can only look in places that the item can be found. This is
known as the exclusionary rule.
What did the Supreme Court decide in the case Plessey v. Ferguson?
That is was okay to segregate people based on race as long as the separate accommodations are equal,
“separate but equal”
What case overturned Plessey v. Ferguson?
Brown v. Board of Education of Topeka Kansas
What did the Supreme Court decide in the case Brown v. Board of Education?
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That separate facilities were inherently (cannot be) equal. Therefore, segregation violates the 14th Amendment.
It overturns Plessey v. Ferguson decision.
What case expands the 14th Amendment?
Brown v. Board of Education
The prosecution must prove beyond a reasonable doubt that the defendant is guiltyWhat did the Supreme Court
decide in the case Swann v. Charlotte Mecklenburg?
After Brown v. Board of Education was decided, integration was only happening in some areas and very slowly.
This case forced integration with busing to different schools to make sure it happened.
What did the Supreme Court decide in the case Korematsu v. U.S.?
After WWII, Japanese people were sent to internment camps in the West. Korematsu felt that this violated his
rights as an American citizen. The Supreme Court decided it was okay to restrict people’s rights in times of war.
What did the Supreme Court decide in the case Heart of Atlanta Motel?
That segregation was illegal in all public facilities not just schools
What was the decision of the case Leandro v. State of North Carolina?
Everyone has the right to an adequate education in NC. Not just an equal sound basic education.
What is a majority opinion?
The ruling of the court in the case
What is a dissenting opinion?
The opinion of a justice that does not agree with the ruling of the court
What is a concurring opinion?
An opinion that agrees with the majority but for a different reason
What is a writ of certiorari?
Calling a case to the Supreme Court
What is an indictment?
A formal accusation made by a grand jury when they accuse someone of having committed a crime.
What is a plea bargain?
A negotiated agreement between the defense and the prosecution in a criminal case, the defense pleads guilty
to a specific charge for a promise of a lower sentence
What is an advantage of a plea bargain for the Prosecution?
They get a guilty verdict even though it is a lesser charge
What is an advantage of a plea bargain for the defendant?
They get a lesser charge
What is mediation?
When a third party helps two others come to a decision by listening
What is arbitration?
When a third party decides for the other two parties how the problem is going to be solved, often happens in
court.
Who has the burden of proof in a criminal trial?
The prosecution has to prove beyond all reasonable doubt that the defendant is guilty
What is an ordinance?
A local law
What is incarceration?
Prison time that is meant to serve as punishment as well as protect the community from the offender
Section 4: Three Branches of Government and Federalism
1. What is popular sovereignty?
People have the power, or consent of the governed
2. What is federalism?
The power is shared between the federal government and the 50 states
3. What is separation of powers?
The idea that limits the power of the individuals, by creating three branches of government.
4. What are checks and balances?
That each of the three branches can limit the power of the other two.
5. What are Congress’s expressed powers?
Coin money. Declare war, keep and maintain an army, regulate trade, approve treaties with foreign
governments
6. What are implied powers?
Those powers not specifically listen in the Constitution
7. What Supreme Court case upheld implied powers?
McCulloch v. Maryland
8. What are some examples of reserved powers?
Conduct elections, establish local governments, and to create public schools
9. What is a bicameral legislature?
It is made up of two houses or chambers
10. What are the two houses of Congress?
Senate and House of Representatives
11. What house of Congress is responsible for confirming all appointments?
Senate
12. What are the major steps in a bill becoming a law?
~Introducing a bill to the House or Senate
~bill is sent to committee
~committee conducts research
~committee sends bill to floor
~the entire house votes after listening to debate
~the bill goes to the other house
~the bill is sent to the President
13. What branch of government can declare war?
Legislative (Congress)
14. What is the Electoral College?
A group of people elected by their states to choose the President
15. How is the President chosen?
By electoral votes
16. What happens if the Electoral College does not produce a winner?
The house of Representatives decides who becomes President
17. What federal agency investigates kidnapping?
The Federal Bureau of Investigation or the FBI
18. Which branch of government does the FBI fall under?
The Executive Branch
19. Which federal agency is in charge of protecting the country from terrorists?
Department of Homeland Security
20. Which federal agency is in charge of national security?
Department of Homeland Security
21. Which federal agency was formed after September 11th in response to terrorist attacks?
Office of Homeland Security
22. Which federal agency stops drugs from entering our borders or drug trafficking between states?
The Drug Enforcement Agency (DEA)
23. What is incorporation?
The creation of a new town or city by act of the General Assembly
24. Who makes up the NC Legislative Branch?
General Assembly
25. What is the Council of State?
A group of the Governor, Lt. Governor, and eight other individuals elected by NC voters at the state level
26. Who runs a county?
An elected board of county commissioners and a hired county manager
27. Who is in charge of law enforcement for a county?
Sheriff
28. What is a local law?
An ordinance
29. What is a referendum?
An election in which citizens vote on a public policy question
30. What is the role of a city council?
To make laws for a municipality
31. What is the role of a county manager?
They are hired by city council to carry out their policies
32. What did the case State v. Mann in North Carolina decide?
Slaves were property. It also decided that the North Carolina Constitution was the Supreme law of the land in
the state of North Carolina
33. What is an excise tax?
An indirect charge on a particular good (paid by the producer or merchant, not the consumer)
34. What is a platform?
A list of beliefs for a political party
35. What is meant by “grassroots?”
Keeping it real with the average voter. The candidate appears to really understand what the common American
is going through.
36. What is a Political Action Committee?
People with special interests who raise money for candidates running for President that support their beliefs
37. What is an initiative?
When voters feel that a law is needed or should be changed, they could start a petition
38. What is a proposition?
A proposed law by voters
39. Explain voter apathy.
When voters don’t care to vote
40. What is a civic responsibility?
Something a person should do
41. Name several civic responsibilities.
Voting, being informed about issues, volunteering in the community, serving in the military, supporting yourself
and your family
42. What is a civic duty?
Something a person has to do or they will be punished
43. Name several civic duties.
Serving on a jury, paying taxes, men registering for the selective service, obeying the law
44. What does E Pluribus Unum mean?
Out of many, one
45. What are franking privileges?
Congressmen can send work related mail for free in order to inform citizens of legislation
46. Describe each of the three branches of government, including who is part of it and what is each branch
responsible for.
Legislative Branch= Congress (Senate and house of Representatives)- they make the laws
Executive Branch= President, VP, Cabinet, Executive Departments, and Independent Agencies-they enforce or
carry out the laws
Judicial Branch= Supreme Court and lower courts – they review and interpret the laws
47. Compare and contrast the Federal Government and the North Carolina General Assembly.
Section 5: Economics and Financial Literacy
1. What are the four factors of production?
Land, labor, human capital, and physical capital
2. Would a chair be sold in the factor market or product market?
Product market
3. What is scarcity?
People have an unlimited amount of needs and wants and there are only a limited amount of resources (factors
of production) and people can’t always get what they want
4. How does scarcity make people choose?
They can’t have everything because there is a limited amount of resources
5. What is a trade-off?
When you give up one thing in order to get something else
6. What is buying an item a trade-off for?
Keeping the money and investing it
7. What is opportunity cost?
The most valuable thing that is given up in order to get what you want
8. What do robotics do for a business?
Improve productivity
9. What is specialization?
When one person is an expert in their field. It is a way to become more productive in a business
10. What are the effects of automation?
You will need less labor or human capital
11. What is the law of diminishing returns?
Eventually, you will reach a point where you just can’t get more productive
12. In what type of economic system does the government control all aspects of the economy, such as what to
produce, how to produce it, and for whom?
A command economy
13. Who decides what to produce in a market economy?
The consumer
14. What do patents and copyrights protect?
Intellectual property so that people keep coming up with new idea
15. What is the circular flow of money?
That money constantly transfers from producers
16. What are the two markets involved in circular flow?
The product market (consumers buy from producers) and the factor market (businesses buy from consumers)
17. What is the law of demand?
People will buy more when the price is less
18. What is the law of supply?
Producers will make more at a higher price
19. Explain the relationship between supply, demand, and price.
Price directly influences supply and demand. As the price increases, demand decreases and supply increases.
When the price decreases, demand increases, and supply decreases.
20. What is a company’s profit based on?
Consumer demand
21. What happens to price in a surplus?
Prices go down
22. What happens to price in a shortage?
Prices go up
23. What happens to price if a company has a monopoly on a market?
Prices will go up
24. What happens in a competitive market?
Prices will remain low
25. What is a sole proprietorship?
Business owned and operated by a single person
26. What is an advantage of a sole proprietorship?
~Owner receives all profits.
~Easier to start up and lower cost because there are no required filing fees.
~Few documents are required at start up.
~Owner is free to make own decisions concerning the business operations.
~Owner pays only personal income taxes on the profits.
27. What is a disadvantage of a sole proprietorship?
~Owner alone is responsible for all liabilities incurred by the business; if the business does not have enough
assets to pay back business debts, creditors can take the personal assets of the owner.
~Owner’s ability to raise capital is limited to personal funds and the funds from people who are willing to give
the owner loans, which can limit the size of the business.
~The business may come to an end at the owner’s death, it does not continue unless transferred to heirs, but
when it is transferred to family or heirs a new sole proprietorship is created.
28. What is a partnership?
A business owned and operated by two or a small group of people
29. What is an advantage of a partnership?
~Businesses as partnerships do not have to pay income tax; each partner files the profits or losses of the
business on his or her own personal income tax return. This way the business does not get taxed separately.
~Easy to establish.
~There is an increased ability to raise funds when there is more than one owner
~Wider pool of knowledge, skills, and contacts.
~Improved management with more than one owner.
30. What is the disadvantage of a partnership?
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~Partners are jointly and severally liable for the actions of other partnership obligations including contracts,
torts, and breaches of trust. Joint and several liability means that if a third party were to sue the partners, the
third party can sue any one of the partners without suing all of them. If a partner has been sued but cannot pay
the third party the full amount, the third party may collect the money from the remaining partners.
~Each partner is individually liable for the debts and obligations of the business; if the business does not have
enough assets to pay back business debts, creditors can take the personal assets of the partners.
~A partner cannot transfer interest in the business without the unanimous consent of the partners.
~Partnerships can potentially be unstable because of the danger of dissolution if one partner wants to
withdrawal from the business or dies.
What is a corporation?
a separate legal and tax entity created by individuals (shareholders) who offer money, property or both for the
corporation’s capital stock
What is an advantage of a corporation?
~There is a pooling of capital from many investors and it is therefore easier to get the business up and running.
~Shareholders are not personally liable for the debts of the corporation. If the corporation fails, shareholders
may lose their investments in the corporation, but are not personally responsible for the corporation’s debts.
What is a disadvantage of a corporation?
~Double taxation. The profits of the corporation are taxed as they are earned at a corporate level, and the profit
is also taxed to the shareholders when it is distributed out as dividends.
~Shareholders that control and own a significant amount, or majority, of the corporation’s voting stock have a
dominant voice in the management of the business in comparison to shareholders that do not own as much
stock.
What is the role of the Federal Deposit Insurance Commission (FDIC)?
To protect the accounts of individuals who deposit money into the bank
What is Gross Domestic Product?
The total dollar value of all goods and services produced in a country in a given year
What happens in a recession?
GDP is falling, unemployment rates are up, prices are falling
What happens in an expansion?
GDP is rising, unemployment is falling, production is up, and interest rates are rising along with the price of
goods
What are some economic indicators to show how a country is doing economically?
Unemployment rates, interest rates, and the consumer price index
What is the Consumer Price index?
It looks at the prices so often to see if they are going up or down
What is inflation?
When prices are rising
What is downsizing?
When companies lay workers off
What do protective tariffs discourage?
Global interdependence
What is comparative advantage?
When it is cheaper for one country to produce than another. It is the country with the least opportunity cost
What are the effects of fiscal policy changes during a recession?
The government will lower taxes and increase spending in order to lower unemployment rates. This may lead to
a national deficit or the government borrowing money
What are the effects of fiscal policy changes during an expansion?
The government will raise taxes and decrease spending in order to lower prices that may be caused by inflation
What are the effects of monetary policy changes in a recession?
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The Federal Reserve Board may use loose money policy. Increasing the money supply by lowering the discount
rate (rate at which banks borrow), lowering reserve requirements, or buying back bonds from customers
What are the effects of monetary policy changes in an expansion?
The Federal Reserve Board may use tight money policy. Decreasing the money supply by raising taxes, raising
the discount rate, or selling bonds to customers so that they are investing instead of spending their money
What is a bear market?
Not confident in the stock market and believe they will lose money
What is a bull market?
Confident in the stock market and feel invested
What is the difference between currency and money?
Currency is something tangible that represents money. Money is the value that tangible item has.