T/F: In class we listened to a radio clip about shareholders who owned stock in US corporations during the Reunification period.
False - 18th-century ship captains who transported English prisoners to Australia. It proved cheaper to maintain them properly than treat them poorly when the government started paying by the prisoner delivered.
Which of the following categories was NOT spurred by growth in the Reunification Era?
A. Technology
B. Racial Discrimination
C. Energy Sources
D. RailRoads and National Markets
E. Management
A. Technology
B. Racial Discrimination
C. Energy Sources
D. RailRoads and National Markets
E. Management
B. Racial Discrimination
Growth fueled changes in everything else. Sorry, this isn't a very well written question.
Growth fueled changes in everything else. Sorry, this isn't a very well written question.
The A management principles state:
1) A manager's decision making authority should be equal with their B .
2) C reporting and auditing to identify problems and suggest solutions.
3) Routine D (2 words) of all employees (including managers).
1) A manager's decision making authority should be equal with their B .
2) C reporting and auditing to identify problems and suggest solutions.
3) Routine D (2 words) of all employees (including managers).
A. McCallum
B. level of responsibility in the firm
C. Internal
D. performance evaluations
B. level of responsibility in the firm
C. Internal
D. performance evaluations
What is a holding company? Is it legal?
A holding company comes about when one firm owns shares in another. Firms continue to operate under their own charter, but the decision-making and voting rights are controlled by the holding company.
Yes, holding companies are legal in most states.
Yes, holding companies are legal in most states.
Explain the US steel situation. How much capacity did US steel control? Does the Supreme court find this merger ok?
Carnegie Steel has a strong backwards vertical integration. Federal and National Steel have strong forward vertical integration. The three firms horizontally merge to crate US Steel that has full vertical integration. Individually, they are worth $700 million, together, they are worth $1.4 billion because of economies of scale.
US Steel controlled 1/2 of steel making capacity and huge amounts of cole, ore, and transportation.
Supreme court is chill with it all because they didn't do anything to harm consumers.
US Steel controlled 1/2 of steel making capacity and huge amounts of cole, ore, and transportation.
Supreme court is chill with it all because they didn't do anything to harm consumers.
Economic theory suggests that monopoly will increase price and decrease quantity. However, from 1864 to 1914, real prices were falling and output was increasing in manufactured goods, transportation, and financial services. Why is that?
Explain:
1) Firms grew, but so did markets
Explain:
1) Firms grew, but so did markets
Monopoly power depends on the size of the firm relative to the market and cheapening transportation brought firms into competition with local businesses, expanding markets.
Economic theory suggests that monopoly will increase price and decrease quantity. However, from 1864 to 1914, real prices were falling and output was increasing in manufactured goods, transportation, and financial services. Why is that?
Explain:
2) In some local markets, competition actually increased.
Explain:
2) In some local markets, competition actually increased.
transport costs were decreasing, so firms could compete in national markets with local brands
Economic theory suggests that monopoly will increase price and decrease quantity. However, from 1864 to 1914, real prices were falling and output was increasing in manufactured goods, transportation, and financial services. Why is that?
Explain:
3) Few firms managed to maintain monopoly power
Explain:
3) Few firms managed to maintain monopoly power
short-run monopoly power usually didn't last because of competing firms entering the market from a low cost of entry
Economic theory suggests that monopoly will increase price and decrease quantity. However, from 1864 to 1914, real prices were falling and output was increasing in manufactured goods, transportation, and financial services. Why is that?
Explain:
4) Most markets were closer to oligopolies
Explain:
4) Most markets were closer to oligopolies
firms usually had limited competition, which was close to a competitive market
Economic theory suggests that monopoly will increase price and decrease quantity. However, from 1864 to 1914, real prices were falling and output was increasing in manufactured goods, transportation, and financial services. Why is that?
Explain:
5) Diversification meant availability of substitutes
Explain:
5) Diversification meant availability of substitutes
Goods with more substitutes have a more price elastic demand, so it limited the market power of a monopoly firm
Economic theory suggests that monopoly will increase price and decrease quantity. However, from 1864 to 1914, real prices were falling and output was increasing in manufactured goods, transportation, and financial services. Why is that?
Explain:
6) Technological change meant opening of barriers to entry
Explain:
6) Technological change meant opening of barriers to entry
Tech advancement reduces the marginal cost of production for existing and new firms, so competition ensues because of greater ease of entry.
What was the purpose of the Clayton Act?
To remove ambiguities and target a few specific behaviors such as price discrimination against buyers, exclusive contracts, interlocking directorates (if it lessened competition), and stock acquisition of a competitor.
It also established the FTC (Federal Trade Commission) to enforce the act.
It also established the FTC (Federal Trade Commission) to enforce the act.
Why did the Sherman Antitrust act achieve little, according to the book?
The kind of competition envisioned by the writers of the act was actually helpful and protected consumers. The fall in communication and transportation costs helped bring national and international markets in competition with local businesses, which helped lower prices and increase competition.
T/F: Unanticipated inflation can benefit lenders and harm borrowers.
Why?
Why?
False - Unanticipated deflation harms borrowers and benefits lenders.
This is because borrowers did not predict the deflation, so suddenly they have to pay back more money than they originally thought they would have to (b/c the interest and principle on the loan is now worth more).
This is because borrowers did not predict the deflation, so suddenly they have to pay back more money than they originally thought they would have to (b/c the interest and principle on the loan is now worth more).
What did the Coinage Act of 1792 do? What does 15:1 mean?
It established a "bimetallic standard" for US currency based on silver and gold. They were printed in different weights to equal each other in value.
15:1 is the original mint value of silver to gold. The silver must be 15 times heavier than the gold to equal it in value.
15:1 is the original mint value of silver to gold. The silver must be 15 times heavier than the gold to equal it in value.
Explain the Defacto Silver Standard.
Because the value of gold and silver changes over time, the market value hit 16:1 by 1834. So silver is now worth a little bit less and gold a little bit more.
Silver was the currency used by the populace because gold became more valuable on the market. So they hoarded gold and used silver. The over-valued metal at the mint will be used more in circulation. To be over-valued at the mint is to not be worth as much on the market.
Since both coins are supposed to be worth the same but the market differs, the cheaper of the two is used: silver.
Silver was the currency used by the populace because gold became more valuable on the market. So they hoarded gold and used silver. The over-valued metal at the mint will be used more in circulation. To be over-valued at the mint is to not be worth as much on the market.
Since both coins are supposed to be worth the same but the market differs, the cheaper of the two is used: silver.
T/F: The undervalued metal at the mint will circulate as money.
Why?
Why?
False - the metal over-valued at the mint (silver) is circulated as money and the under-valued metal at the mint is hoarded (gold)
Why?
The under-valued metal is not given enough value at the mint (duh), but that means on the market it has more value. So people hold on to gold like they would shares in a firm (as an investment) and spend the currency that isn't worth as much on the market. That's why the Bimetallic standard was essentially a mono-metallic standard in practice.
Why?
The under-valued metal is not given enough value at the mint (duh), but that means on the market it has more value. So people hold on to gold like they would shares in a firm (as an investment) and spend the currency that isn't worth as much on the market. That's why the Bimetallic standard was essentially a mono-metallic standard in practice.
The A (3 words), in 1912, denounced the US banking system, listed 17 points of " B " (2 words) and called for the establishment of a central bank. This ultimately led to the creation of the C (2-3 words) in 1914.
A. National Monetary Commission
B. gross deficiency
C. Federal Reserve System
B. gross deficiency
C. Federal Reserve System
Before the A (3 words) of 1863, the creation of National banks was unpopular. Bank operations were still limited to a single state. It was passed because Congress wanted to stimulate the sale of B (2-3 words) to help finance the Civil War and Conservative Congressmen wanted to decentralize control of the money supply and provide a uniform national C .
A. National Bank Act
B. US Treasury Bonds
C. currency
B. US Treasury Bonds
C. currency
What were the two reasons National banks were attractive to depositors? Explain them briefly.
1. Legal reserve requirement - banks had to hold a certain amount of deposits in reserve. This makes depositors more trusting and more willing to deposit.
2. Double liability on stocks - bank can lose double its money on investments it makes with your money, so it has twice the amount to pay you back with (I think this is what it means)
2. Double liability on stocks - bank can lose double its money on investments it makes with your money, so it has twice the amount to pay you back with (I think this is what it means)
After the state bank boom in the early 1880s, the government set a 10% tax on A (1 word) notes replacing the previous 2% tax. What effect did this have on State and National banks and their notes issued? What was the intended and unintended consequence of raising the tax? By 1900, were there more national or state banks?
A. state notes
The tax essentially prohibited SB notes. Immediately after, state bank charters declined and national bank charters grew in number.
Intended: Increase the number of national bank charters which would increase the amount of money from Treasury bonds.
Unintended: Five years later in 1870s, SBs began to increase. They found a way around bank notes (and the tax) with demand deposits (checking accounts).
By 1900, there were more state banks and also greater total assets in state banks.
The tax essentially prohibited SB notes. Immediately after, state bank charters declined and national bank charters grew in number.
Intended: Increase the number of national bank charters which would increase the amount of money from Treasury bonds.
Unintended: Five years later in 1870s, SBs began to increase. They found a way around bank notes (and the tax) with demand deposits (checking accounts).
By 1900, there were more state banks and also greater total assets in state banks.
What three things does money do for you? Explain each.
1) Medium of exchange - it is accepted for goods and services (most important)
2) Standard unit of account - prices are generally quoted in dollars and not goats or silly bands
3) Store of value - way of holding wealth (not the only way to hold wealth; can be in land, bonds, etc.)
2) Standard unit of account - prices are generally quoted in dollars and not goats or silly bands
3) Store of value - way of holding wealth (not the only way to hold wealth; can be in land, bonds, etc.)
Explain the five perceived problems with the Dual banking system.
1) No centralized control
1) No centralized control
Basically there was no national banking system, just a bunch of other banking systems.
More specifically, there was no Lender of last resort or clearinghouse. A Lender of last resort is someone who lends to a bank when it doesn't have enough money to pay out depositor's demands for their money back. A clearinghouse is basically a place that clears balances between banks when they are all connected to one another. Without one, each transaction/check has to be cleared individually with the banks involved. So no clearinghouse means its difficult for banks to cash checks (for gold and silver).
More specifically, there was no Lender of last resort or clearinghouse. A Lender of last resort is someone who lends to a bank when it doesn't have enough money to pay out depositor's demands for their money back. A clearinghouse is basically a place that clears balances between banks when they are all connected to one another. Without one, each transaction/check has to be cleared individually with the banks involved. So no clearinghouse means its difficult for banks to cash checks (for gold and silver).
Explain the five perceived problems with the Dual banking system.
2) Little ability to regulate money supply
2) Little ability to regulate money supply
Especially so after the widespread use of demand deposits.
Predictable seasonal changes in the demand of money impacted interest rates. Farmers complained about increasing interest rates around harvest time.
Now the Fed increases the money supply in certain times of the year to ease interest rate swings.
Predictable seasonal changes in the demand of money impacted interest rates. Farmers complained about increasing interest rates around harvest time.
Now the Fed increases the money supply in certain times of the year to ease interest rate swings.
Explain the five perceived problems with the Dual banking system.
4) Susceptibility to panics & runs
4) Susceptibility to panics & runs
The problem lay in "Country" banks and the call-loan market:
Call-loans are loans that can be called for repayment at any time
"Country" banks are world banks that held a lot of money in city banks.
The problem was that city banks loaned out "Country" banks' money at higher interest rates but city banks borrowed this money on call. So if the "Country" bank experienced a run, it would call back the city banks' loans who would in turn call back loans it gave out. Basically, the situation could domino easily.
Call-loans are loans that can be called for repayment at any time
"Country" banks are world banks that held a lot of money in city banks.
The problem was that city banks loaned out "Country" banks' money at higher interest rates but city banks borrowed this money on call. So if the "Country" bank experienced a run, it would call back the city banks' loans who would in turn call back loans it gave out. Basically, the situation could domino easily.
Explain the five perceived problems with the Dual banking system.
5) No Macroeconomic policy
-Define QTM
-Feed booms/starve recessions
5) No Macroeconomic policy
-Define QTM
-Feed booms/starve recessions
Commercial banks "feed booms (1) and starve recessions(2)"
The Quantity Theory of Money (QTM) says MV=PY
M = money supply
V = velocity (how many times money exchanges hands in a year)
P = price level (GDP inflator is useful)
Y = Real output (how much stuff was created)
So... changes in M effect P and Y
Remember that PY=nominal GDP
1) Banks feed booms
A boom is when Y (real output) increases. When that happens, M increases which then causes P to increase. This causes inflation. Countercyclical monetary policy was developed (not present during Reunification) to decrease M when Y is increasing to avoid inflation. The Fed basically does the opposite of what the market would do to avoid inflation.
2) Banks starve recessions
Recession is a decrease in Y. Banks lend less during recession, so M decreases. To counter, the Fed decreases interest rates and expands M. Like 1, the Fed didn't exist so this was a problem.
The Quantity Theory of Money (QTM) says MV=PY
M = money supply
V = velocity (how many times money exchanges hands in a year)
P = price level (GDP inflator is useful)
Y = Real output (how much stuff was created)
So... changes in M effect P and Y
Remember that PY=nominal GDP
1) Banks feed booms
A boom is when Y (real output) increases. When that happens, M increases which then causes P to increase. This causes inflation. Countercyclical monetary policy was developed (not present during Reunification) to decrease M when Y is increasing to avoid inflation. The Fed basically does the opposite of what the market would do to avoid inflation.
2) Banks starve recessions
Recession is a decrease in Y. Banks lend less during recession, so M decreases. To counter, the Fed decreases interest rates and expands M. Like 1, the Fed didn't exist so this was a problem.
What two things did the Aldrich-Vreeland Act form? Explain.
National Currency Associations
A group of 10 or more banks certified to be in "sound financial condition" could make emergency loans to banks experiencing runs or shortages. These loans would be backed up against assets in the borrowing bank's portfolio.
National Monetary Commission
Commission to study the banking system and make recommendations. It made these recommendations:
1. Create a central bank to hold bank reserves and act as lender of last resort
2. The Central bank should serve as fiscal agent for federal gov.
A group of 10 or more banks certified to be in "sound financial condition" could make emergency loans to banks experiencing runs or shortages. These loans would be backed up against assets in the borrowing bank's portfolio.
National Monetary Commission
Commission to study the banking system and make recommendations. It made these recommendations:
1. Create a central bank to hold bank reserves and act as lender of last resort
2. The Central bank should serve as fiscal agent for federal gov.
The National Monetary Commission was created to study the US banking system and make recommendations. What two recommendations did it suggest?
1) Create a A (2 words) to hold bank reserves and act as B (4 words).
2) The Central bank should serve as fiscal agent for the C (1-2 words).
1) Create a A (2 words) to hold bank reserves and act as B (4 words).
2) The Central bank should serve as fiscal agent for the C (1-2 words).
A. central bank
B. lender of last resort
C. Federal government
B. lender of last resort
C. Federal government
The original structure of the Fed had a A member Board of Directors. It had B district banks with 9 member boards.
Of these 9 local directors, C were elected to represent the public. D could be bankers and the remaining E had to come from business, industry and agriculture.
Of these 9 local directors, C were elected to represent the public. D could be bankers and the remaining E had to come from business, industry and agriculture.
A. 7
B. 12
C. 3
D. 3
E. 3
B. 12
C. 3
D. 3
E. 3
Flashcard set info:
Author: savhighsmith
Main topic: Economics
Topic: History of Economics
School / Univ.: UGA
City: Athens
Published: 12.10.2010
Card tags:
All cards (119)
no tags
