Glossary of ISS Unit 3

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Social Science involving production, distribution and consumption of goods and services
Overall aspect of national economy, income, output, and interrelationship
National economy, individual firms, households, and consumers
Central problem of economic society
Puritan Work Ethic
Work, Thrift, Savings
Command Economy
Systems using totalitarian political methods as well as state-directed economies
Market Economy
A system in which individuals own land, housing, otherwise known as the means of production
Major assumptions of capitalist philosophy
Needs were primarily individual, not communal.
Consumer soverignty
The ability of buyers to cast their vote in dollars
Division of labor
Workers producing only small parts of finished good
The "market"
Structured environment in which buyers and sellers bid freely amongst themselves to determine wages, rent, and profits
Who determines resource allocation?
Buyers and sellers
Who determines what is produced?
Buyers and sellers
Who determines prices?
Buyers and sellers
What are the factors of production
Land, Labor, and Capital
What is laissez-faire?
Hands off government in the market
What role does competition play in a capitalist economy?
Provides for the most efficient use of resources
Control by one group of the means of producing or selling a good or service
Control by a few groups of the means of producing or selling a good or service
A merger between distinctly different corporations
What impact did the Industrial Revolution have on capitalism?
Mechanization, assembly line, efficiency
Gilded Age
Civil war to WWII
Why is it said that early American labor unions lived in a hostile environment?
Industry was against labor unions
rugged individualism
What halted the growth of labor unions
Knights of Labor
First successful labor union
Great Sitdown Strike in Flint
Dec. 30 1936-Feb 11, 1937, 112,000/150,000 workers came to work and sat down everyday at Fisher Body No. 2
CIO compared to AFL
Considered more radical
National Labor Relations Board
Prevent interference with the right of labor
Fair Labor Standards Act
Established minimum wage and maiximum hours
First minimum wage
25 cents an hour
Wagner Act
Gave workers the right to self-organize
Walsh-Healy Act
Congress established 40 hour work week
Taft-Hartley Act
Prevented unfair practices by labor unions
Labor's basic goals today
Higher wages, shorter hours, and better working conditions, fringe benefits, job securtity
Percent of workers in unions
Why do unions have less power now
less members
How did government regulate economy before New Deal?
Maintaining conditions in which free enterprise can operate
Why were Americans so optomistic during summer of '29?
Industrial production had risen 50% over the past decade, profits were high, increased wages
Causes of Great Depression
World food prices declined, slump in the construction industry, misdistribution of income
How did Hoover and Roosevelt differ in the 1932 campaign on economic policy?
Roosevelt attacked Hoover’s Deficit Spending and promised to balance the budget
Legacy of Great Depression
Made a lasting imprint on the lives of millions of Americans. Challenged the traditional view that those who failed in the economic race only had themselves to blame
How did FRR deal with the banking crisis?
Emergency Banking Relief Act Agriculture? Agricultural Adjustment Act.
How did FDR deal with agriculture?
Agricultural Adjustment Act
How did FDR deal with unemployment?
National unemployment rate during Great Depression?
• What were some of the main problems facing President Truman during the immediate post World War II period?
• What wartime controls gave the U.S. economy some of the characteristics of a “command economy” during the war?
Meat and Gasoline rationing
What is inflation?
Increase in price on a good or service
Demand-pull inflation
Increased inflation due to increasae in consumer demand
Cost-push inflation
Increased production costs, as from higher wages, drives up prices
• Why did the Republicans win control of both houses of Congress in 1946 and why was New York Gov. Thomas E. Dewey, their presidential nominee, heavily favored in 1948?
Strikes, Truman won labor support after vetoing Taft-Hartley
Provisions of Taft-Hartley
REstore balance to labor-management relations
Closed Shop
Only union members could be hired
Union Shop
Need not be a member to join, but had to within a timeframe
Open Shop
Union member is voluntary
Section 14-B of Taft-Hartley
Outlawed closed shops and union shops
Youngstown Sheet and Tube vs Sawyer
President exceeded his authority and ordered mills to private ownership
Philosophy behind Employment Act of 1946
Have full employment
Full employment
4% or less
Structural unemployment
Long-running, serious problem, results when demand for a particular projuct is low in relation to its supply
Cyclical unemployment
Cause by fluctuations in the business cycle, decline from a demand in goods and services, when above 4%
Frictional unemployment
Short run, normal, workers voluntarily leave one job in search for another
•When does the U.S. government consider a person to be unemployed
Someone who is actively seeking a job but is unable to find it
•What segments of the U.S. labor force are most likely to be unemployed?
Teens and blacks
•What are some of the government programs devised to get people off the unemployment list?
Humphrey-Hawkins Full Employment and Balanced Growth Act
•What was President Eisenhower’s basic economic philosophy?
Security with solvency
•What was his attitude toward business leaders?
Admired them
•Why did Eisenhower engage in so many veto battles with congressional Democrats?
The all republican congress was turned over to the democrats in 1958
•What did Eisenhower think of Keynesian economics, specifically deficit finance
He wanted to lead America away from deficit spending
• How did the Eisenhower Administration respond to the three mild recessions that occurred between 1953-1960?
Tax cuts
•What role did the slump of 1960 play in the outcome of that year’s presidential election?
Helped JFK win over Nixon
Landrum-Griffin Act
Contains “internal democracy”, requires detailed financial reports by unions
JFK's top economic priority
What was the “New Economics?
Assumes the US economy has an ever rising potential, Heller, Actual and Potential GDP
How did JFK and LBJ fight inflation
Tax cut
Trying to persuade others using the high office
Wage-price guidelines
Tied wage prices to producitivity for balance
Why was a tax cut for business at the top of Kennedy’s agenda?
Investment for the future
Gross National Product
The total market value of all the goods and services produced by a nation during a specified period
What is the meaning of the concept of “Potential Gross National Product?”
What we could produce in a full employment economy
What is Gross Domestic Product?
The total market value of all the goods and services produced within US borders during a specified period
How does the U.S. government define poverty?
Family of four below $19,350, individually- 9570.
How did the Vietnam War influence Johnson’s domestic priorities?
U.S. can't have both guns and butter
Why did LBJ agree to a 10% tax income tax surcharge in 1968?
Pushed hard on the idea of the “Great Society” needed lots of money to have both guns and butter.
What were some of the key provisions of the Economic Opportunity Act?
Created coordinated spending of other federal agencies that were directed towards a specific group of poor people
What was the Job Corps?
Youths from bad home situations were offered remedial education, as well as vocational training
What was “Operation Headstart?”
Pre-school children received early education before becoming disabled by a bad home life.
The Neighborhood Youth Corps
to help unemployed teen dropouts by giving them jobs after school and during vacations. Keep teens off the streets
• What are some examples of the ‘entitlement” programs enacted as part of Johnson’s Great Society?
Medicare and Medicaid
When someone qualifies for something by meeting specific standards
Combination of a stagnant economy and inflation.
Nixon's biggest economic problem
How did Nixon fight inflation
Monetary Fiscally--tax cuts
Rate of inflation when Nixon took office
Why did Nixon resort to Federal controls over economy
Stocks slumped, GNP declined
Why don't wage and price controls work?
Halts competition
All things that should go up (stock market, corporate profits, real spend able income) go down and unemployment, prices, and interest rates go up
Rate of inflation when Ford took office
WIN program
Whip Inflation sucked
Consumer Price Index
The basic measure of price increases in goods and services
Extrememly high and rapid inflation
Greenspan Commission
Commission headed by Alan Greenspan to overview the Social Security problem
Greenspan's recommendations
Raise the age to receive SS to 67, federal and non-profit employees made SS universal
• What are some of the problems that it could face in the future when the labor force will shrink in relation to the number of retired workers?
There will be more people receiving SS than putting money into the system
Present Social Security tax rate
Old age and survivor insurance
SS program the reimburses hospitals and physicians for medical care to persons above 65
Helps people who can not finance their own medical expenses
Reagan's college major
supply-side economics
A return to the ideas of laissez-faire, hoped to reduce both unemployment and inflation, govt cools off economy by reducing demand for goods and services
Reasons behind Recovery Act of 1981
? Productivity was reduced by high taxes, Marginal Tax Rates must be reduced, people needed incentives to work
Gramm-Rudman-Hollings Act of 1985
Wanted to shrink the deficit for the budget to be balanced by 1991
Air traffic controllers dispute
Federally employed workers were not allowed to strike, so when air traffic controllers did, Regan fired them
Progressive tax
Takes higher percentage of tax from high-income than lower income
regressive tax
Takes higher percentage of tax from low-income than high-income.

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