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| An economic system in which individuals and corporations, not the government, own the principal means of production and seek profits. |
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| An economic system in which the government is deeply involved in economic decisions through its role as regulator, consumer, subsidizer, taxer, employer, and borrower. |
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| As measured by the Bureau of Labor Statistics (BLS), the proportion of the labor force actively seeking work but unable to find jobs. |
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| The rise in prices for consumer goods. |
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Consumer Price Index (CPI): |
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| The key measure of inflation that relates the rise in prices over time. |
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| The principle that government should not meddle in the economy. |
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| Based on monetarism, monetary policy is the manipulation of the supply of money in private hands by which the government can control the economy. |
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| An economic theory holding that the supply of money is the key to a nation’s economic health, Monetarists believe that too much cash and credit in circulation produces inflation. |
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| The main instrument for making monetary policy in the United States. It was created by Congress in 1913 to regular the lending practices of banks and thus the money supply. The seven members of its Board of Governors are appointed to 14-year terms by the president with the consent of the Senate. |
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| The policy that describes the impact of the federal budget – taxes, spending, and borrowing – on the economy. Fiscal policy is almost entirely determined by Congress and the president, who are the budget makers. |
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| Keynesian Economic Theory: |
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| The theory emphasizing that government spending and deficits can help the economy weather its normal ups and downs. Proponents of this theory advocate using the power of government to stimulate the economy when it is lagging. |
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| An economic theory advocated by President Reagan holding that too much income goes to taxes so too little is available for purchasing, and the solution is to cut taxes and return purchasing power to consumers. |
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| Transnational Corporations: |
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| Businesses with vast holdings in many countries – such as Microsoft, Coca-Cola, and McDonald’s – many of which have annual budgets exceeding that of many foreign governments. |
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| A policy designed to ensure competition and prevent monopoly, which is the control of a market by one company. |
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| Food and Drug Administration (FDA): |
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| The federal agency formed in 1931 and assigned the task of approving all food products and drugs sold in the United States. All drugs, with the exception of tobacco, must have FDA authorization. |
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| Federal Trade Commission (FTC): |
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| The independent regulatory agency traditionally responsible for regulating false and misleading trade practices. The FTC has recently become active in defending consumer interests through its truth-in-advertising rule and the Consumer Credit Protection Act. |
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| National Labor Relations Act: |
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| A 1935 law, also known as the Wagner Act, that guarantees workers the right of collective bargaining, sets down rules to protect unions and organizers, and created the National Labor Relations Board to regulate labor-management relations. |
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| Negotiations between representatives of labor unions and management to determine pay and acceptable working conditions. |
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| A 1947 law giving the president power to halt major strikes by seeking a court injunction and permitting states to forbid requirements in labor contracts that force workers to join a union. |
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| A state law forbidding requirements that workers must join a union to hold their jobs. The Taft-Hartley Act of 1947 specifically permitted state right-to-work laws. |
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