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Exam Review SheetCivics and Economics – ScioliUnit 1: American GovernmentFunctions of Government: Order, Security, services, formulate public policy3 levels of governmentTypes of Government:Direct democracy v. Representative democracyConstitutional MonarchyAuthoritarian regimesDemocratic Principles and FoundationsCompetitive ElectionsMajority Rule / Minority Rights – RousseauEnglish Heritage:Enlightenment thinking – rationalityRousseau – social contractLocke – natural rights & social contractMontesquieu – separation of powers1215 AD – Magna CartaParliament / legislature1689 – English Bill of RightsCommon law based on precedentColonial Resistance:MercantilismResults of the French and Indian war:Proclamation of 1763Stamp ActBoycott / repeal of Stamp Act“Illegal” searches made legalBoston MassacreBoston Tea Party-related punishments removes trial by jury1st Continental Congress demands restoration of rightsLexington and Concord2nd Continental Congress result: Declaration of IndependenceDeclaration of Independence: Written by Thomas JeffersonPurpose of the documentDeclares all men are created equal (endowed with rights)Defines natural rights: life ,liberty, pursuit of happiness (property)Declares social contract theory Lists grievances as evidenceThose who sign mutually pledge their lives, fortunes, sacred honorArticles of ConfederationWritten by Second Continental CongressConfederation = loose alliance of equalsOne branch - a legislature, each state had one voteCould sign treaties, could control an armyNo power to tax, could not enforce laws, control trade between statesRequired 13 /13 to amendDid set process for settling land – Land Ordinance of 1785Debt crisis builds – wealthy are underprinting moneyShay’s Rebellion results – landowners are scared, leads to desire for stronger national powerConstitutional Convention: Assume that human nature is self-servingKey Compromises:The Virginia Plan – 3 branches, legislature based on population onlyNew Jersey Plan – one branch, each state 1 vote, could tax and control trade between statesConnecticut or Great Compromise3/5 CompromiseThe Slave Trade CompromiseThe Electoral CollegeFar from democratic: only the House of Reps was directly elected by the people and had 2 yr termsRatificationFederalistsFederalismThe Federalist Papers – Madison, Hamilton and JayThe AntiFederalistsThe addition of the Bill of RightsRatified by 13 states, after NC and RI initially rejectedUnit 2: The ConstitutionStructure of the ConstitutionPreamble – 6 purposes of gov’t.Article I – legislative – powers of CongressArticle II – Executive – powers of the PresidentArticle III – Judicial – powers of the judiciary, lack of judicial review until Marbury v. MadisonIV – relations among the statesV – amendment processVI - supremacy clause, no religious test to hold officeVII – ratificationPrinciples of the ConstitutionPopular sovereignty – consent of the governed, competitive electionsRule of law – limited governmentSeparation of PowersChecks and Balances – know each part (pg 88)Formal amendment process – 2/3 Congress or national conventions +? state legislatures or state conventionsInformal Amendment Processes – Elastic Clause – Necessary and properCommerce ClauseJudicial Review / Interpretation Legislative Action – ex: Fiscal federalismPresidential ActionCustomFederalismExpressed / delegated / enumerated powers v. implied (elastic clause) - examplesReserved powers – examplesConcurrent powers – examplesSupremacy clauseThe Tenth amendmentCivil Liberties – Bill of RightsFirst amendment – 5 freedoms Religion (establishment and free exercise)Speech – including symbolic speech (Tinker v. DesMoines, Texas v. Johnson)Press - Historical precedent – the Peter Zenger TrialMost regulated – broadcastingCan’t endanger the government or others’ safety, disturb the peaceAvoid prior restraint / censorshipAfter fact can be accused of libel (written defamation) or slander (spoken)Courts allow restrictions on obscenity, speech during wartime / threatens nat’l securityAssembly – implies freedom of association, also.Time and place restrictions allowedPetition – formal request / complaints to the governmentRights of the Accused4th amendment – search and seizure requires probable cause and /or a warrant5th amendment – indictment by grand juryNo double jeopardy, no self incriminationDue process – cannot be denied life, liberty or property without legal proceduresEminent domain – must be compensated for property 6th amendment – speedy trial8th amendment – no cruel, excessive, or unusualpunishmentDeath penalty upheldOther protections2nd amendment – Right to bear armsIndividual right to bear arms recently established 2008- Washington DC v. Heller3rd amendment – no quartering of troops7th amendment – right to a jury trial in civil cases9th amendment – rights not in the Constitution retained by the people10th amendment – powers retained by the statesCivil Rights – 13th amendment – ended slavery14th amendment – Defines citizenshipEqual protection clause protects vulnerable groups from discrimination Ex: race, gender, sexual orientation, age , disabilityDue process clause extends possibility that states must honor civil liberties15th – black male suffrageLater amendments – 17th amendment – direct election of senators19th – women’s suffrage23rd – vote for DC residents24th – eliminated poll tax26th – 18 year olds can voteUnit 3: Branches of GovernmentLegislative BranchBicameral House of Representatives2 year termsBased on population – censusGerrymanderingMajority Leader = Speaker of HouseSenate2 from each stateStaggered 6 year terms17th amendment – direct election by state Vice Pres. symbolic leader and tiebreakerMajority Leader = President Pro TemporeOther leaders: majority and minority floor leadersMajority and minority WhipsCommittee leaders – from majority partyBased on seniorityCommittees: standing, joint and special / selectExpressed and Implied powers (same as last unit, pg 186)Non legislative powersChecks and balances powersPropose amendmentsSenate approves appointmentsImpeachment: House charges, Senate triesLimitations on powerCivil Liberties, Habeas Corpus, no Bills of Attainder, Ex Post Facto, Checks and BalancesRoles of LegislatorsLawmakers, Casework, Bring grants, projects, contracts to state / district, Legislative Oversight of agenciesNorth Carolina legislature = General AssemblyReview federalism – reserved and expressed powers (pg 377)State constitution elevates legislative branchStatutesLegislative oversightOversees University systemImpeachmentLocal Legislatures:CountiesMunicipalities: Ex: cities, villages, townsIncorporation via charter or annexation“home rule” – ordinancesDistrict v. at large electionsCounty Commissioner/ manager systemSchool budgetelectionsSocial servicesLandfillsParks / rec / greenwaysJail / sheriffCity Council / manager systemUtilitiesRecyclingSidewalks / sewersZoningCity parks/recIndependent boards oversee education, elections, mental health, alcohol, soil & waterExecutive BranchPresident22nd amendment= 2 term, 10 year limitVice President – limited official authorityPresidential Succession Act – succession after VP25th amendment – handles death, resignation, temporary or permanent disabilityConstitutional PowersVeto billsCall Congress into special sessionCommander in chiefChief diplomatMake appointmentsPardonRolesChief ExecutiveExecutive ordersDiplomatMilitary LeaderLegislative LeaderHead of State – symbolic leaderEconomic LeaderParty LeaderThe Executive Offices & BureaucracyExecutive Branch Offices: 2,000 employeesExecutive Office of the President – White House Staff – led by Chief of Staff (500)Office of Management and BudgetNational Security Council – VP, State, Defense, Joint Chiefs, NSA / CIACouncil of Economic AdvisersOffice of US TradeThe Cabinet – 15 depts.: Dept of Justice led by Attorney GeneralSecretaries: State, Treasury, Defense, Interior, Agriculture, Commerce, Labor, Health & Human Services, Housing and Urban Dev., Transportation, Energy, Education, Veteran’s Affairs, Homeland SecurityChanging Roles of VP / First Lady: recent growth in responsibilities / projectsThe Bureaucracy: 3 million civilian employeesCivil servants:Top 2500 jobs – apptd. By PresidentRest of Civil Service – permanent, hired on merit (civil service exams), have due process rights before being fired.Three basic jobs:Rulemaking, Administrative tasks, RegulationIndependent Agencies (3 types):Executive Agencies – independent agencies with specified role ex: NASAGovernment Corporations – run as nonprofits ex: US Postal ServiceRegulatory Agencies – head apptd. By Pres but can’t fire them ex: Federal Communications CommissionNorth Carolina Governor – Chief of State – symbolic leaderChief Executive – carries out statutes, appoints officials / oversees agencies, administers budgetChief Judicial Leader - Grants pardons /commutes sentencesChief diplomat with feds / statesParty LeaderLegislative Leader – approves or vetoes legislation, can propose ideas for lawsCommander in Chief – in charge of National Guard (Guard can be federalized)4 year term – 2 consecutive term limit, 30 years old, 5 years citizen, 2 years residentLieutenant Governor elected separately, president of Senate, sits on several boards10 Cabinet areas Oversees directly, ex: Dept. of Admin / Budget, Corrections, Crime & Public Safety, Health& Human Services, Environment & Natural Resources 8 Council of State Elected by Voters, 4 yr.terms – Agriculture, Treasurer, State, Public Instruction, Attny. General, Labor, Insurance, AuditorDivided nature of State government leads to independence in agencies and confusion among voters, and a lack of coordination.Local Executives:Municipality / City – Mayor of City CouncilCounty – County Commissioner ChairBudgets and Spending:Federal Budget Process – (Ideal & Theoretical)President proposes a Budget in FebBudget Resolution passed – total to be spentMandatory spending – obligations we must meet by law (interest, Social Security)Discretionary Spending – optional spending – 1/3 of budgetAppropriation bills – start in the HouseRevenues – money the gov’t getsIncome taxes = largest sourceProgressivePayroll taxes - fund Social Security, MedicareExcise Taxes – on goods / User feesRegressiveFlat Tax – proportional taxExpenditures – Where the money is spentLargest – Social Security2nd largest - defenseState Budget Process - Revenues – Largest = $ from Federal Gov’t. Sales TaxState Income TaxesExpenditures – Administer welfare, food stampsUniversity systemHighway maintenanceHospitals / prisonsTeachers / operational expenses for schoolsLocal Government BudgetsRevenues –Property taxes, fines and fees, local sales taxes, bond salesExpenditures – School buildings, fire and police, water, sewage and sanitationUnit 4: Branches of Government Cont’d – JudiciaryJudicial BranchThe nature of the judicial systemCriminal cases – gov’t charges someone with breaking the law. Punishment.Civil – disputes between two parties. Consists of statutes and common law / precedent.Participants in the Judicial SystemLitigants – people must act to bring a case before judges.Plaintiff – brings chargesDefendant – is chargedCase names = plaintiff v. defendantMust have standing to sue: have sustained direct and substantial injury.Also must be justiciable disputes – capable of being settles by legal meansThe Federal CourtsTypes of Courts: Supreme Court, 12 federal courts of appeal, 91 district courtsThe Structure of the Federal Judicial System – Congress creates courts Original jurisdiction – where a case is first heard, 90% start and end here.Appellate jurisdiction – hear cases being appealed to a higher court. District Courts – 91 Federal courts. One in each state plus PR, DC.Courts of original jurisdiction.Only ones that have trials and seat juries.680 judges, each court has 2-28 depending on how busy they are.Cases heard: federal crimes, civil suits under federal law, civil suits between those in different states over $75,000 (called “diversity of citizenship” cases) , bankruptcy supervision, review of federal regulatory agencies, admiralty and maritime law, supervise naturalization.Courts of Appeal – Review All final decisions of district courts. Some rare cases go straight to Supremes.12 judicial circuits, including one for DC.Has 6 – 28 judges in each district.Usually sit in 3 judge panels but can sit en banc (all judges together) and all hear key cases. The Supreme Court – Eight associate justices and one chief justice. Unlike other courts, they select the cases they want to hear.Cases they have original jurisdiction over – between US and states, between two or more states, one state and citizens of another state, between a state and a foreign country All others appellate, must involve a significant federal question, must involve federal law. Cases coming from state Supreme courts go straight to US Supreme Court.Politics of Judicial SelectionLifetime appts – can only be impeached. Has happened seven times in 200 years. Congress cannot reduce their salaries, either.Senate must approve appointees by majority vote. A president’s most long lasting legacy.Justices retire (when possible) strategically to leave the court when a president with their ideology is in officeThe Supreme Court – Backgrounds of Judges and Justices1st and foremost – competence and characterIs not a constitutional requirement that they be lawyers, but they all have beenSupreme Court – only five nonwhite males: Marshall, OConnor, Thomas, Ginsberg, KaganAccepting cases – Weekly conferences. 8000 cases submitted annually.If four judges want to take up a case, they accept it. Put on docket.Can rule using existing info or can schedule oral arguments. Issue a writ of certiorati – formal document that calls up a case.Usual cases: civil liberties, cases where lower courts disagree, disagreement between a majority of justices and lower court decisionsMaking DecisionsIssue about 80 rulings a year / 24 or so are per curiam – meaning without explanation. October - June – two week cycles of hearing cases and writing opinions. Oral arguments - written briefs providedEach lawyer has 30 minutes to make their case, and justices can interrupt.They conference, vote, opinion writing.Majority vote = 5 votesDissenting opinions (why they disagree with the majority) and concurring (agree but for a different reason) If there is a tie due to recusal, lower court ruling stands.Need 5 votes to establish judicial precedent. Majority of cases that reach the court are settled on stare decisis – let the precedent stand. The court has overruled its own precedent over 200 x. Most famous – Brown v Board.Checks and BalancesJudicial Review – power of court to nullify laws, acts of Congress and President, states and localities, the bureacucracyNot in the original ConstitutionPrecedent est. in Marbury v. Madison caseChecks on Court PowerThe other branches can reverse course by amending the Constitution.Also, Congress can change the courts’ organization.President and Congress can conspire to ignore court and get away with it. NC State Court SystemTrial CourtsDistrict Courts – judge only, elected to four year termsHandles law, mental commitments juvenile, traffic, Civil cases < $10,000, misdemeanors and feloniesSuperior Courts – Trial with a judge and jury.Eight districts, judges elected to 8 year termsHandle civil cases > $10,000, all criminal appeals (misdemeanors and felonies)Other elected superior court offices: Clerk of Court (does wills and foreclosures)District Attorney (lawyer that represents the state in criminal trials)Appellate Courts – look at law and procedure, no trials, witnesses, juriesCourt of Appeals – 15 judges, sit in 3 judge panels, elected to eight year terms.NC Supreme Court – 7 justices, elected to eight year terms.Administers all other courtsHears all death penalty appealsOnly constitutional related cases can be appealed from here directly to US Supreme CourtLandmark NC decisions: Bayard v. Singleton (1787)– est. judicial review of state Supreme CourtState v. Mann (1830) – est. masters could beat slaves as propertyLeandro v. State of NC (1997) – NC students have a right to a sound basic educationUnit 5: Active CitizenshipCitizenshipCitizenship by birth – by parent or territoryAlien – resident and non-residentImmigrantrefugeesUndocumenteddeportationVisa / green cardNaturalization processImmigration laws / prioritiesLosing citizenship: denaturalization, expatriation, crime (treason, rebellion)Duties and ResponsibilitiesResponsibilites = shouldsBe informedVoteRespect rights and property of othersRespect other opinions / culturesVolunteer time / resourcesDuties = mustsObey lawsPay taxesDraftJury dutyEducationPolitical PartiesDefinitionsRoles:Nominate candidates / win electionsInform the publicBe a watchdog on the governmentLink levels of governmentHistory of Political PartiesFirst Parties – Democratic-Republicans / FederalistsFounding of Democrats 1828 / JacksonFounding of Republicans 1860 / LincolnThird Parties – Winning the presidency highly unlikelyWinner take all system, getting on the ballot, fundingSingle issue parties – ex: prohibitionist partiesIdeological – ex: Communist partyIndependent candidatesOther Party SystemsMultiparty systems / proportional / coalition gov’t.One party systems = undemocraticRoles of National and State Party organizationsNational Committee & ChairpersonNational Convention – platformState and Local OrganizationPrecincts – write resolutions for platformWards combine precinctsWards attend county conventionsCounty Chair is highest level of party organization in a stateVotingQualifications for voting: citizen, registered, resident, 18Relevant amendments: 15 (black males), 19 (women), 23 (DC residents), 24 (poll tax), 26 (18 yr olds) Voter turnout based on demographics: age , class, race, educationVoting process: Registration (1993 Motor Voter law)Polling place assignmentFinding Sample ballotsEndorsements, voter guidesElection day:Voter verificationTypes of ballots / machinesSplit / straight ticketSecret ballot / public info on voting habitsAbsentee Exit pollsElectionsPollingValid polls are: large sample, Random, representative, unbiased wordingProblems with polls:Push polls – biased wordingLazy pollsCanvassing – done by parties. May poll on an issue or sell their candidate.Types of ElectionsPrimaryGeneral ElectionsIssue elections: referendum, initiatives (propositions), referendumsSpecial elections: run-offs, recallsPresidential Elections:PrimaryVP pickConventionCampaigns / debatesElectoral College / winner take all systemRunning for OfficeRaising Money:1971 Federal Election Campaign Act:Hard $ - money donated directly to a campaignPACS – Political Action Committees / Interest Groups Collect campaign $Hard $ / PAC limits, public disclosure, public funding established1976 Buckley v. Valeo ruling upheld FECA rules, also said you could self fund campaigns.Late 1970s – Soft $ invented- money donated to party for non campaign expenses (Get out the vote, registration drives) allowed. PAC money goes there. PAC money also goes to ads on TV to influence voters.2002 Bipartisan Campaign Reform Act / BCRA / McCain Feingold ActSee campaign finance handout I createdAlso banned TV ads by outside groups 60 days before election2010- Citizens United v. Federal Elections CommissionSupreme Court ruled that interest groups can run issue ads at any time.Established corporations as “people” with freedom of speech.Led to Super PACS, runaway campaign spending.The MediaPrint media v. electronic mediaFor profit media prevails / sell ads / seek viewersMedia drives the public agenda – what issues citizens, and therefore elected officials, focus uponNew development: the celebrity candidateLeaks / trial balloons ScoopsWatchdog role Embedding 1st amendment restricts prior restraint / censorshipAfter the fact can be held accountable for libelNew York Times v. Sullivan establishes a higher standard for gov’t officlals to claim libel – must show maliceSecret sources and state shield lawsFCC – Federal Communications Commission - regulates broadcast (radio and TV) mediaInterest GroupsRelated to right to assemble and petitionEconomic interest groups: ex: Chamber of Commerce, Labor UnionsEthnic, age, religious groups: ex: NAACP, NOW (Women), AARP (elderly)Issue / Causes: NRA (guns), Sierra Club (environment)Public Interests: League of Women Voters, Consumer ReportsMethods of Influence:Elections: Political Action Committees donate to campaigns, canvass, endorse candidatesUse the courts: sue, file “friend of the court” briefs to give their point of view on a caseLobbying: Meet with elected officials and provide info to influence their thinking, draft bills, testify in hearingsPropaganda: winning over voters with one-sided infoDecline of traditional media (with journalistic standards and editors) , rise of blogs, “fake news”, Elected Officials now go straight to the people through internet based platforms.PropagandaKey to campaigning and persuasionTechniques: Bandwagon, Name calling, Endorsement, Stacked cards, glittering generality, just plain folks, transferProliferation due to the internetExtremist groups now target isolated people, spread propaganda, recruit new members ex: terrorist cells, AltRightUnit 6: Making Laws and Legal ProcessHistory, Sources and Types of LawLegal Systems in History that are the foundation of our legal system:Hammurabi’s code – first know written lawThe Ten Commandments – add moral elementRoman Law –begin the true study of law, nomenclature English Common Law + Magna Carta – add precedent based law, legislative bodiesSources of Law:Constitutional LawStatutory LawAdministrative LawCommon LawTypes of Law:Criminal – government is the plaintiff, 95% of the time it is the state government.Felonies v. misdemeanorsIncludes crimes against property - larceny, robbery, burglaryCivil – disputes between people or public law (constitutional rights of citizens v. gov agencies)Initiated by a lawsuit being filedTort law Family lawInternational Law – The Geneva ConventionThe United Nations – founding, goals, location, Security CouncilUniversal Declaration of Human RightsSecurity Council oversees international tribunals for violationsPeacekeeping effortsGlobalization and multinationals watchdogEnvironment & Global Warming – Paris SummitJuvenile Law – rehabilitation focus2 types: neglect and delinquencyTrials = a judge, no jury, closed courts, identities and records kept secretHow a Bill Becomes a LawPrivate v. Public billsResolutions – formal statements of opinion without power of lawJoint resolutions do have power of law if signed by pres. – constitutional amendments and designating money to be spent are done by this processBill to LawSponsor must introduce to either house of CongressAssigned to a committeeCan: pass it, change it (“mark up”), replace it, pigeonhole it (ignore it), kill it by a voteFloor debate House debate set by Rules CommitteeSenate debate shaped by filibuster rule, requires 60 votes to stop debateonly the Senate allows “riders” – unrelated amendmentsVotingHouse: by voice, by standing up, by electronic meansSenate: voice, standing, roll call (Aye or Nay is said)Conference Committee required if two different versions are passed.President signs or vetoesCan also “pocket” the bill. If ten days pass & Congress is in session = passed. If they adjourn before ten days, vetoed silently.Influencing LawsHow the following can influence lawmakingPolitical PartiesConstituentsInterest GroupsLobbyistsMediaPublic OpinionLegal Process – Individual ProtectionsConstitution:Habeus CorpusNo Bills of AttainderNo ex post facto lawsInnocent Until Proven Guilty4th amendment: search and seizure - search warrants5th: Due process , no self incrimination, no double jeopardy, right to a grand jury6th: right to an attorney, right to a trial, right to question witnesses v. plea bargain8th: no cruel and unusual punishment, no excessive bail14th : Equal ProtectionCriminal ProcessCrimes – break a law, harm people or property, government prosecutesA written code of law = penal codeMisdemeanors v. feloniesFelonies can = loss of vote, right to bear arms, serve on jury, employment as teacher, police or militaryPunishment = deterrence, protect society, rehabilitationSentencing:Indeterminate is common: minimum and maximumMandatory sentencingSuspended sentenceProbationHouse confinementMonetary fineRestitution to victimsWork releaseImprisonmentDeathParoleCriminal ProcedureArrest – may require a warrant if not witnessed by policeMiranda Rights Read (if custodial interrogation is involved)Booking: photographing, fingerprinting, lawyer securedHearing: present charges, evidence, judge determines bail, if any. ORGrand jury decides on charges.Arraignment: Plea entered. Guilty: on to punishment phaseNot guilty: on to trialNo contest: not admit guilt but submits to the court’s judgementTrial: Can waive right and have a bench trial with just a judge. If not:Jury selectionOpening statementsWitnesses testifyCross examinationClosing statementsJury instructions: criminal standard = “beyond a reasonable doubt”VerdictNot guilty = acquittalHung jury = retrial may happenSentencingAppealCivil ProcedureLawsuits: private parties (people or corporations) sue other parties or the governmentIncludes Tort Law – damage due to negligenceIncludes Family Law – adoption, custody, alimony, child support, divorceProcess:Retain a lawyerFile suitSummons delivered to defendantPleadDiscoveryAlternatives to trial: Settlement, Mediation, ArbitrationTrial – jury in cases of high valueStandard: “a preponderance of the evidence”Verdict:For the defendant = plaintiff must pay their court costsFor the plaintiff = defendant pays damagesAppealUnit 7:Personal FinanceSavingThe Power of InterestCompound InterestCompounding FrequencyRule of 72Savings Vehicles – savings account, money market, cdYour Budget: Needs vs. WantsBudgeting Best PracticesThe Banking SystemThe Federal Reserve SystemAccount FeesThe Basics Of Checking AccountsHow to write a CheckBalancing Your Checking AccountOnline AccountsPayment TypesPayment TypesCredit vs. DebitOther Payment Types: certified check, money orderUsing a Credit CardKey terms: APR, annual feePaying More Than The MinimumUnderstanding Your BillCredit ScoresCredit Score RangesComponents of a Credit ScoreActions That Will Hurt Your?Credit ScoreKeeping Tabs On Your CreditThe Impact of Your Credit ScoreHigher EducationEducation ROI Financing Higher EducationTypes of Federal LoansSubsidized and Unsubsidized Federal LoansFAFSA Ways To Pay For Higher EducationScholarships and GrantsSavingsPublic LoansPrivate loansYou cannot make student debt go away by declaring bankruptcyRenting vs. OwningTypes of Assets: Appreciating v. DepreciatingHousing:Renting Pros & ConsLease AgreementsOwning Pros & ConsMortgagesMortgage Terms & FactorsTransportation ChoicesBuying a Car Insurance and TaxesWhat Is Insurance?Types of Insurance: car, house, renters, lifeInsurance Policy Terms:PremiumDeductibleHow Insurance WorksOut-of-Pocket CostsTaxes: Types of Taxes: property, sales, income, capital gainsParts of a PaystubTax Forms1040EZ Form W-4 deduction declarationsConsumer ProtectionWays Identity Theft Can HappenMaking A Strong PasswordSocial Security NumbersSensitive documentsHow to Tell Identity Theft Has OccurredResolving Identity TheftHow To Protect YourselfInvestingRetirement Plans: 401(k) and 403 (b), IRAsInvestment Vehicles: stocks, bonds, mutual fundsStock Exchanges & IndexesRisk vs. ReturnThe Effect of Time on your PorfolioDiversifying your portfolioUnit 8: Fundamentals of Economics Economic SystemsNeeds v. WantsLimited resources = ScarcityEconomic models: Microeconomics v. MacroeconomicsEconomic Systems decide: What to produce, how to produce, how goods will be distributedEconomic ChoicesTrade-offs and Opportunity CostCosts Fixed costs v. variable costsTotal costMarginal CostRevenue: Total revenueMarginal revenueMarginal Benefit – often diminishingCost benefit analysis – production possibilities curve / frontierFactors of ProductionNatural ResourcesLaborCapital – manufactured goods used to make other goodsEntrepreneursEconomic Sectors and Circular Flow of Economic ActivityFactor markets v. Product marketsConsumer sector, Business sector, Government sector, Foreign sectorTypes of EconomiesMarket Economies: individual freedom, competition, “pump priming” and problem solving (dealing with externalities), high standard of livingCommand Economies: controlled by government, lower per capitaSocialism v. communismMixed economies: government provides regulation, infrastructure, & goods and servicesCapitalism: free enterprise, markets, accumulation of wealth, economic freedom, private property, competition, profit motive, voluntary exchangeDemandDefinition: the desire, willingness and ability to buy a good or serviceDemand schedulesDemand curvesMarket demand (Macro) v. Individual demand (Micro)Marginal utility – typically diminishingChanges in demand:As seen on a demand curvePossible causes: population, income, tastes / trends, expectations, change in product market, changes in price, changes in substitutes / complementsDemand elasticityElastic v. inelastic and influencing factors: cost, substitutes, degree can be postponed, degree of necessitySupplyDefinition: quantities of a good or service that producers are willing to sell at all possible market prices.Supply schedulesSupply curvesProfit motiveMarket supplyChanges in supply: As seen on a supply curvePossible causes: cost of resources, productivity, technology, government policy, taxes, subsidies, expectations, number of suppliersSupply elasticitySupply can change quickly = elastic, depends on manufacturing detailsSupply and DemandEquilibrium priceNeutralFlexibleOccur in a range for freedom and choiceAre familiar / knownSurplus v. shortagePrice controls:Price ceilings v. price floorsTypes of BusinessesCharacteristics, advantages / disadvantages of:Sole proprietorshipsPartnershipsCorporations – charter, stock, stockholders, Board of DirectorsA new structure created around 1990: LLC – limited liability corporationscooperativesLabor UnionsCollective bargainingRight to work lawsMediationArbitrationUnion tools: strike, boycottManagement tools: lockouts, injunctionsGovernment tools: seizureRole of GovernmentPrivate v. public goodsPositive and negative externalitiesRegulation: Monopolies: mergers, natural monopolies (beneficial) v. artificial (not in the public interest)Antitrust lawsSherman Antitrust, Clayton AntitrustTruth in ads and labelsFederal Trade CommissionSafetyConsumer Product Safety Commission – recallsBusiness CyclesMeasurement: Gross Domestic Product (GDP) v. Real GDPExpansionsRecessions – drop in GDP for 6 monthsUnemployment rateInflation – Consumer Price IndexStock MarketStock Market Indexes: DOW, S&P, Stock exchanges: NASDAQ, NYSEBull v. Bear MarketsFiscal Policy: taxing and spending to offset boom and bustKeynesian TheoryRecession: lower taxes, increase gov’t. spendingExpansion: raise taxes, lower gov’t spendingTheory v. Reality of fiscal policyMonetary Policy: Federal Reserve manipulates interest rates to offset boom and bustPage 662: the FED, organization and districtsThree “tools”:Adjusting the discount rate – lower rates = more money, higher = less money supplyAdjusting reserve requirements for banks – can raise (lowers money supply) or lower (increases)Open Market operations – the Fed buys bonds or Treasury Bills ................
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