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NATIONAL INDUSTRIAL RECOVERY ACT: One of the first acts passed under New Deal program the Roosevelt administration in 1933, it specifically allowed workers to organized into unions and to engage in collective bargaining without interference from firms. This act, going by the acronym NIRA, was declared unconstitutional in 1935, but while in force gave a big boost to labor unions and membership. The National Labor Relations Act was created in 1935 to replace the NIRA.

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Lesson 12: Business Cycles | Unit 4: Causes Page: 19 of 26

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Three points about investment and business cycles:
  • First: Investment is sensitive to interest rates. Higher interest rates increase the cost of investment borrowing and discourages investment.
  • Second: Interest rates rise and fall with the business cycle. During an expansion, interest rates rise enough to discourage investment, and trigger a contraction. During a contraction, interest rates fall enough to encourage investment and cause a new expansion.
  • Third: Investment doesn't react immediately to interest rates. The production of capital goods takes time and does not respond instantly to interest rate changes.
Interest-rate-induced changes in investment seem to be a natural cause-and-effect part of business cycles.

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TAX PROPORTIONALITY

The proportion of income paid in taxes at different levels of income. In some cases the proportion of income paid in taxes increases with income in other cases it decreases. And in still other cases, it remains the same. Tax proportionality comes in three alternatives -- proportional tax (different incomes pay the same proportion in tax), progressive tax (higher incomes pay a higher proportion in tax), and regressive (lower incomes pay a higher proportion in tax).

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Today, you are likely to spend a great deal of time flipping through mail order catalogs hoping to buy either a how-to book on building remote controlled airplanes or an extra large beach blanket. Be on the lookout for jovial bank tellers.
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The first U.S. fire insurance company was established by Benjamin Franklin in 1752 in Philadelphia.
"Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success. "

-- Pablo Picasso, artist

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