Market Failure
When the agent pursues his own self-interest rather than the interest of the principal
What is the principal agent problem
The founder of the Keynesian school of economic thought
Who is John Maynard Keynes?
Author of the famous quotation -- "nothing can be said to be certain, except death and taxes."
Who is Benjamin Franklin
if, no matter what the other player does, this strategy is more beneficial than the other strategy
What is a dominant strategy?
The Great Recession was largely caused by a crash in this market
What is the housing market?
A benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service
What is an externality?
The author of The Wealth of Nations, laid the foundation of classical free market economic theory.
Who is Adam Smith?
a tax on items considered undesirable or harmful, such as alcohol or tobacco
What is a sin tax?
It takes place when each player remains in the same position as long as no other player would take a different action
What is Nash equilibrium?
On this day, share prices on the New York Stock Exchange completely collapsed, becoming a pivotal factor in the emergence of the Great Depression
What is Black Tuesday
When one party to an economic transaction possesses greater material knowledge than the other party
What is asymmetric information?
The founder of the economic theories know as "monetarism"
Who is Milton Friedman?
A tax intended to induce agents to internalize externalities
What is a Pigouvian tax?
a group of firms that collude by agreeing to restrict output to increase prices and profits
What is a cartel?
an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to increase the money supply and encourage lending and investment
What is quantitative easing?
Theorem that states that when transaction costs are low and property rights are well defined, the allocation of resources will be efficient regardless of the initial assignment of property rights
What is Coase's Theorem
The chair of the Federal Reserve during the Great Recession
Who is Ben Bernanke?
Amendment to the Constitution which made the income tax a permanent fixture in the U.S. tax system
What is the Sixteenth Amendment?
When two or more firms act to monopolize a market, without an explicit or formal arrangement
Before filing for bankruptcy in 2008, it was the fourth-largest investment bank in the United States
What is Lehman Brothers
When a party to a contract can take risks without having to suffer consequences
What is moral hazard?
Who is the current chair of the Federal Reserve?
Who is Jerome Powell?
The percentage of taxation that the highest bracket of income in the U.S. is taxed federally (currently)
What is 37%
A Nash Equilibrium in which no player can improve its payoff by changing its decision at any decision node
What is subgame-perfect Nash equilibrium
Decade with the highest inflation rate in U.S. history
What are the 1770s