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CARTEL: A formal agreement between businesses in the same industry, usually on an international scale, to get market control, raise the market price, and otherwise act like a monopoly. A cartel tends to be unstable because the artificially high prices it sets gives each member of the cartel an incentive to "cheat" with a slightly lower price. When only one member of the cartel lowers the price, it can make oodles of profit by taking customers away from the other members. If they all cheat, the cartel falls apart. While cartels damage efficiency, they're power is often short-lived because of this cheating. Like collusion and other techniques of market control, cartels are illegal in the United States.
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Lesson 19: Money Creation | Unit 3: Modern Banking
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Page: 11 of 23
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Suppose you find a $100 bill that you deposit in Amos National Bank.- Amos National adds $100 of vault cash, or reserves, to its assets, and $100 to its liabilities, your account.
- Some of these reserves are required ($10) and some are excess ($90), which can be used for a loan.
- Amos National Bank adds $90 to the customer's checking account, so the customer can buy new tires.
Two changes:- Amos National has a $90 loan balanced by a $90 checkable deposit.
- Amos National Bank just created $90 of money.
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ABSTRACTION Simplifying the complexities of the real world by ignoring (hopefully) unimportant details while doing economic analysis. Abstraction is an essential feature of the scientific method. Hypothesis verification, model construction, and comparative static analysis are not possible without abstraction.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius wanting to buy either a video camera with stop action features or one of those memory foam pillows. Be on the lookout for the happiest person in the room.
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This isn't me! What am I?
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The first U.S. fire insurance company was established by Benjamin Franklin in 1752 in Philadelphia.
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"The past is a foreign country; they do things differently there." -- Leslie Poles Hartley, Writer
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HKFE
Hong Kong Futures Exchange
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