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LIBERAL: A political view that favors--(1) paternalistic government, (2) correction of market failure with government intervention, (3) equal opportunities for all citizens regardless of race, age, gender, ethnic origin, or planet of origin, (4) redistribution of income and wealth, and (5) extensive regulation and control by government over the profit-seeking businesses of the second estate.

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Lesson 18: Banking | Unit 4: Regulating Banks Page: 18 of 24

Topic: Why? <=PAGE BACK | PAGE NEXT=>

Banking is a heavily regulated industry.

Reasons:

  • First: Banks have the temptation to go for large profits at the expense of protecting deposits.
  • Second: The economy's health rests with having the 'correct' money supply.

The problems:

  • Banks get carried away seeking profits without having enough deposit-protecting reserves.
  • Customers can't withdraw deposits and lose trust.
  • Banks shut down, remaining bank deposits become worthless, and the money supply shrinks.
  • The economy heads into a recession.

Important points:

  • A failed bank is bad for the economy.
  • Government can control the checking account part of money only by controlling and regulating banks.

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NOVEL INFORMATION

Information received by the five senses (sight, sound, taste, touch, and smell) that is new, different, and unusual. Because novel information has the potential to be threatening it triggers an automatic response through what is commonly termed the "fight or flight" reaction. Novel information is evaluated in contrast to redundant information, which is familiar and presumably nonthreatening.

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Today, you are likely to spend a great deal of time at a flea market wanting to buy either a case for your designer sunglasses or arch supports for your shoes. Be on the lookout for crowded shopping malls.
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North Carolina supplied all the domestic gold coined for currency by the U.S. Mint in Philadelphia until 1828.
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