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LAW OF COMPARATIVE ADVANTAGE: A basic principle that states every nation has a production activity that incurs a lower opportunity cost than that of another nation, which means that trade between the two nations can be beneficial to both if each specializes in the production of a good with lower relative opportunity cost. While this law is fundamental to the study of international trade, it also applies to other activities, especially the specialization and the division of labor.

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Lesson 18: Banking | Unit 4: Regulating Banks Page: 20 of 24

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How are banks regulated?
  • First: Government regulators say do something, and if you don't do it, then you suffer the consequences--dollar fines, losing operating control to regulators, or spending a little time in jail.
  • Second: Many bank regulations involve accounting procedures and practices. The FDIC and Comptroller of the Currency are the institutions that take care of these matters.
  • Third: The regulations we are most concerned with are those involving reserves and deposits, which play a key role in controlling the money supply.

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AGGREGATE DEMAND DECREASE, SHORT-RUN AGGREGATE MARKET

A shock to the short-run aggregate market caused by a decrease in aggregate demand, resulting in and illustrated by a leftward shift of the aggregate demand curve. A decrease in aggregate demand in the short-run aggregate market results in a decrease in the price level and a decrease in real production. The level of real production resulting from the shock can be greater or less than full-employment real production.

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BLACK DISMALAPOD
[What's This?]

Today, you are likely to spend a great deal of time at a crowded estate auction trying to buy either semi-gloss photo paper that works with your neighbor's printer or a birthday gift for your father that doesn't look like every other birthday gift for your father. Be on the lookout for neighborhood pets, especially belligerent parrots.
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This isn't me! What am I?

Francis Bacon (1561-1626), a champion of the scientific method, died when he caught a severe cold while attempting to preserve a chicken by filling it with snow.
"Anyone who has never made a mistake has never tried anything new. "

-- Albert Einstein, physicist

M1
currency and coins held by the nonbank public plus checkable deposits issued by traditional banks, savings and loan associations, credit unions, and mutual savings banks
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