1. Econ Unit 5 Notes

2. Corporations Ownership shares of a corporation are called stocks Stockholders elect a board of directors to act on their behalf. Stockholders have limited liability, meaning that they are not responsible for the debts of the corporation. Financial capital is the money needed to run a business or enable it to grow larger.

3. Unions Some workers join labor unions in order to have a better chance to obtain higher pay and better working conditions. In a modified union shop, workers do not have to join a union, but can choose to do so. Mediation is when a third party tries to help the union and the company reach an agreement.

4. Unions/Labor Collective bargaining is when union and company officials meet to discuss the terms of the workers’ new contract. The civilian labor force is the term for all civilians 16 years old or older who are either working or looking for work. The unemployment rate is the percentage of the civilian labor force who are not working but are looking for jobs.

5. Monopolies Antitrust laws are designed to control monopoly power and to preserve and promote competition. A natural monopoly occurs when the costs of production are minimized by having one firm produce the product.

6. GDP & Money The real GDP shows an economy’s production after the distortions of price increases have been removed. An economic expansion occurs when real GDP goes up. Inflation is a sustained increase in the general level of prices.

7. The Government and the Economy A budget is the blueprint of how the government will raise and spend money. A budget resolution is a document that totals revenues and spending for the year and sets targets for how much will be spent in various categories.

8. Business Private goods are goods that when consumed by one individual, cannot be consumed by another. When two or more companies form a single business, a merger has taken place. The alternating periods of economic growth and decline make up the business cycle.

9. The Government & The Economy When a government spends less than it receives in revenues, it has a budget surplus. When a government spends more than it receives in revenues, it has a budget deficit. When the governments spending equals its revenues, you have a balanced budget.

10. The Government and the Economy The FDIC is the federal corporation that insures individual accounts in financial institutions. The Federal Reserve System is our nation’s central bank. A fiscal year is a 12-month period that may or may not match the calendar year.

11. The Government and the Economy Debt is the money that has been borrowed but not yet repaid. States subsidize, or pay part of the costs of, a college education for resident students.

12. The Government and the Economy Social Security is a government program that provides money to people who are retired or disabled. Payroll taxes are deducted from a worker’s paycheck to fund Social Security and Medicare.