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INCENTIVE: A cost or benefit that motivates a decision or action by consumers, businesses, or other participants in the economy. Some incentives are explicitly created by government policies to achieve a desired end or they can just be part of the wacky world we call economics. The most noted incentive in the study of economics is that provided by prices. When prices are higher buyers have the "incentive" to buy less and sellers have the "incentive" to sell more. Price incentives play a fundamental role in the . When prices are higher buyers have the "incentive" to buy less and sellers have the "incentive" to sell more. Price incentives play a fundamental role in the allocation. When prices are higher buyers have the "incentive" to buy less and sellers have the "incentive" to sell more. Price incentives play a fundamental role in the allocation system that society uses to answer the three questions of allocation.
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Lesson 20: Federal Reserve System | Unit 4: Monetary Policy
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Page: 18 of 20
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- That monetary policy is controlling the money creation activity of the fractional-reserve banking system to control deposits and the money supply.
- That expansionary monetary policy increases aggregate demand up to full employment and contractionary monetary policy decreases aggregate demand back to full employment.
- The four tools of monetary policy: open market operations, discount rate, reserve requirements, and moral suasion.
- How open market operations are used by the Fed to control the money supply.
- That the discount rate is used by the Fed to signal the intentions of the open market operations.
- That reserve requirements are the regulations the Fed uses to ensure banks keep enough reserves to back deposits.
- That moral suasion is a policy in which the Fed requests that the banking system take some sort of action.
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FREE-RIDER PROBLEM A problem underlying the provision of public goods that occurs when a person consumes or benefits from a good without making payment. The free-rider problem is the primary reason that public goods are produced by governments. Because public goods are characterized by the inability to exclude nonpayers, once a public good is produced anyone, everyone, can consume without making payment, that is, get a "free ride." Voluntary payments like those occurring in markets will not provide enough revenue to pay production costs. The only way to finance public goods is to force free-riders, and everyone else, to pay through government taxes. The free-rider problem also applies to common-property goods.
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ORANGE REBELOON
[What's This?]
Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway seeking to buy either a coffee cup commemorating last Friday (you know why) or a wall poster commemorating the first day of spring. Be on the lookout for broken fingernail clippers.
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This isn't me! What am I?
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Lewis Carroll, the author of Alice in Wonderland, was the pseudonym of Charles Dodgson, an accomplished mathematician and economist.
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"The more you praise and celebrate your life, the more there is in life to celebrate." -- Oprah Winfrey
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CBA
Cost Benefit Analysis
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