Economics - GED Social Studies

When Franklin D. Roosevelt assumed the Presidency in 1932 America was at the height of the Great Depression. He instituted a massive and sweeping series of programs designed to extend social security to a much larger proportion of the population and to rescue the economy. Collectively this series of programs is called the New Deal. Historians disagree about the success of these programs, but what is clear is that they dramatically changed the responsibilities and duties of the United States government.

Adam Smith is often referred to as “the father of modern economics” for his writings on laissez-faire and free market capitalism. Smith argued in The Wealth of Nations that the government should try and avoid interfering in the economy and that the economy should be almost completely unregulated. His writings and ideas remain deeply influential.

In economic terms "comparative advantage" refers to a situation where one country can produce some goods or resources at a lower cost than another country.

A joint stock company is a large scale business whereby shares (or stocks) are owned by numerous individuals, thereby distributing the responsibility for the company, the risk involved for the individual, and the profits that can be made. The development of the joint stock company by the Dutch, Russians, English, and French at various times in the sixteenth and seventeenth centuries was a very important development in economic history, providing much of the means for Europe to gain great material wealth from the age of Colonialism.

"Interdependence" is used to refer to a situation that exists between two or more countries in which they rely on one another for the exchange of raw resources, finished products, goods, and services to the mutual betterment of their respective economies.

If there is only one company that controls the sale of any particular product they have a "monopoly" on that product.

Social Security is a government program whereby people who have very little money or are too infirm, old, or disabled to earn money of their own are provided a certain amount of support by the government. It emerged in the twentieth century, partly as a product of increasing state control over the lives of citizens and partly out of the progressive mentality that was prevailing at the time. The United States has an extensive Social Security system, although significantly less than many European countries.

A monopoly occurs when one company controls the means or production of a product and is able to exclusively sell that product on the market. The problem with this system is it allows the company to effectively charge higher prices than might be considered "fair." The alternative to this is competition, which occurs when two or more companies control a share of the market and have to compete with each other to produce better quality products at a lower price.

The term Economic equilibrium refers to a state where the supply of a product is equal to the demand for the product. This is an ideal situation that would in theory keep prices and profits consistent. When supply outstrips demand, the price of something will fall, and when the supply cannot meet the demand, the price of something will rise.

In a progressive tax system, the wealthier someone is the higher proportion of tax they must pay. This is the tax system that currently exists in most western countries, including the United States. On the opposite side of the spectrum is a regressive tax system, where the wealthier members of society pay taxes at a lower proportion than everyone else.

In economics, a deficit occurs when the amount of money being spent (expenditures) exceeds the amount of money being collected (revenue) over a given period of time.

The Encomienda System was established by the Spanish in the New World chiefly to facilitate the abuse of the Native American population as a source of labor. A Spanish official was granted the right to effectively own a portion of the native population and was free to force them into whichever form of labor was most immediately profitable, at the expense of millions of native lives. In exchange, the Spanish official was supposed to indoctrinate the native population into the Christian faith.

Labor is defined as the factor of production that is directly attributable to human effort and work. Labor is distinct from capital, in that capital describes inanimate goods that are essential to production, while labor describes the human element of production. Ed, Ellen, and Michael all contribute to the production of Sally's business, but they do so through the provision of capital. Stephanie contributes her own effort and work as a laborer for Sally. Meanwhile, Allen, as a customer, isn't directly involved in the production process.

Frictional unemployment is the name given to a situation whereby people quit because they are dissatisfied with their jobs.

"Scab" is used, in a demeaning fashion, to describe someone who renders the effects of a strike less effective by continuing to work during the strike or by taking the job of a striking member of a union.

The Iron Law of Wages is a famous economic term that originated during the eighteenth or nineteenth Century. It is actually difficult to track who first used the terminology or who first wrote about the idea; historians sometimes credit Malthus, Ricardo, Marx, Engels and so on. The law itself is well-understood: it states that the wage of a laborer will always fall to the very minimum needed to keep the worker working. Because of the massive competition in the labor market, employers have the power to pay their workers as little as possible, because if the worker refuses those terms, someone else will simply take the job. To rephrase: the money paid to a worker will always be the very minimum needed to keep the worker alive and working.

In The Communist Manifesto, the working class is referred to by the latin term “proletariat.” Marx argued that the “proletariat” were essentially enslaved by the bourgeoise and the upper class who controlled the means of production and thus all the wealth and property.

Adam Smith was an Enlightenment-era economic philosopher. He is most remembered for laying down the principle of free-market economics called laissez-faire economics. His theory stated that an economy would have the best success if the government does not intervene. His ideas were widely adopted in Europe and America over the next couple of centuries and were an important foundation of the spread of capitalism around the world.

Mercantilism was an important economic theory in the first era of European colonialism, from roughly 1500 until 1800. With mercantilism, the primary goal of a nation, and a government, should be to regulate trade and the means of production in order to encourage a favorable balance of trade. Essentially, for a nation to succeed according to mercantilist theory, it needs to be exporting more than it is importing. This theory drove many of the actions taken by England and France, along with the other colonial powers, during the age of exploration and the age of colonialism.

Consumer expenditure, or simply consumption, measures the economic output that is devoted to satisfying the wants and needs of individual consumers within an economy. Investment measures the amount of output that is directed toward business or other producers in order to grow the productive capacity of the economy. Government spending measures the amount of output that is directed toward government provision of goods and services, such as roads or police protection. Net exports measure the amount of output that is traded with other countries, and since a country can run either a trade deficit or surplus, this component can be positive or negative. In most modern market or mixed economies, people are relatively free work and consume as they choose. As a result, a majority of economic output in most countries is devoted toward consumer expenditures. Some countries have especially large government sectors, where government spending comes close to matching the consumer sector of the economy. In the United States, consumer expenditure accounts for nearly 2/3 of economic output.