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January 19, 2019 

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COLLUSION: A usually secret agreement among competing firms (mostly oligopolistic firms) in an industry to control the market, raise the market price, and otherwise act like a monopoly. The reason for the secrecy is that such behavior is illegal in the United States under antitrust laws. Collusion is a characteristic trait of oligopolistic industries. Intense competition and interdependent decision-making encourages oligopolistic firms to cooperate. One way to lessen the competition among an oligopolistic rival is to join forces through collusion. (The other way is through merger, but that's another entry.)

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Lesson 19: Money Creation | Unit 2: Fred Returns Page: 9 of 23

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  • Reviewing Fred the Goldsmith, that Fred has developed several modern banking functions: safekeeping, depository, lending and fractional-reserve banking functions.
  • Fred's system of tracking gold flows by issuing receipts for each deposit.
  • The three main features of Fred's system:
    • Knights need not withdraw the same gold deposited.
    • Fred need not personally know each knight requesting services.
    • These gold receipts are as good as gold and become money.
  • Two options Fred has to make a loan:
    • Loan some gold from the safe which could be deposited back in return for receipts.
    • To loan the receipts directly.
  • The importance of fractional-reserve banking and Fred's ability to create money that is used for investment and economic growth.

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PRINCIPLE

A generally accepted, verified, proven, fundamental law of nature. A principle captures a cause-and-effect relation about the workings of the world that has been tested and verified through the scientific method. The law of demand, law of increasing opportunity cost, and law of diminishing marginal utility are three fundamental (and extremely important) economic principles.

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APLS

YELLOW CHIPPEROON
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Today, you are likely to spend a great deal of time searching for a specialty store looking to buy either a genuine down-filled pillow or one of those "hang in there" kitty cat posters. Be on the lookout for poorly written technical manuals.
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Before 1933, the U.S. dime was legal as payment only in transactions of $10 or less.
"You are never given a dream without also being given the power to make it true."

-- Richard Bach, Author

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