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EXAM 1 Chapter 1 - The broadest and most commonly used measures of overall economic performance are the levels and the rise in real gross domestic product (GDP). - The gains in population size and in length of life stem primarily from economic growth, because such growth leads to better diets and cleaner water, to sewage disposal, and other health-enhancing changes. - Another perspective on the economic gains that Americans experienced during the twentieth century comes from looking at the availability, ownership, and use of new goods. - One of the special virtues of the study of economic history is its focus on how and why. - Five Economic Reasoning Propositions 1. Choices matter.  Individual choices are the source economic outcomes. 2. Costs matter.  Choices impose costs. Trade-offs. 3. Incentives matter. 4. Institutions matter.  Laws, customs, moral principles, ideas, and cultural institutions. 5. Evidence matters. - See Figure 1.8 (Population growth over the years vs. inventions) - Over time workers moved from agricultural to other fields as nations advanced 1. Technology (increase in knowledge), specialization and division of labor, economies of scale, organization and resource allocation, human capital. - Nations advance faster than others due to society’s rules, customs and laws, and economic performance. - Partial list of institutional determinants that allow modern economies to flourish: 1. The rule of law, coupled with limited government and open political participation. 2. Rights to private property that are clearly defined and consistently enforced. 3. Open, competitive markets with the freedom of entry and exit, widespread access to capital and information, low transaction costs, mobile resource inputs, and reliable contract enforcement. 4. An atmosphere of individual freedom in which education and health are accessible and valued. - “It is adaptive rather than allocative efficiency which is the key to long-term growth”- North Chapter 2 - By the end of the 15th century, northern Europe had experienced substantial commercial growth and population, especially in the Hanse cities bordering the North Sea and the Baltic. - Accompanying the discoveries of new places and emergence of new trades was the accumulation of knowledge. - Greatest of the sea explorations from Europe took place within a little less than 35 years. - By the early 16th century, the wealth and commerce of Europe had shifted to the Atlantic. - Spain and Portugal came to the “New World” followed by Holland, France, and England later on. - Half-brothers, Sir Humphrey Gilber and Sir Walter Raleigh were the first Englishmen to undertake serious ventures to America.o Gilbert went to Newfoundland in 1578 and 1583 but failed to colonize the territory both times, eventually losing his life on the return to England. o Raleigh was granted to settle in Virginia and control the land with a 600 mile radius from any colony that he established. o Raleigh brought two groups to the new continent:  First landed on an island of Roanoke off of North Carolina staying for less than a year.  Second was ordered to settle near Chesapeake Bay but Governor John White disagreed and landed in Roanoke. He returned to England and when he returned back to Roanoke he didn’t find a single person. - After a long war between England and Spain (1588-1603), England reattempted colonizing with two charters: o Group of Londoners – Could settle south of the English territory. o Merchants of Plymouth and other western port towns – Could settle over the northern part. o Those who survived the winter in the northern colony gave up and went home, and Jamestown won the hard-earned honor of being the first permanent English settlement in America. - Jamestown, settlers sent shiploads of mica and yellow ore in 1607-08 (worthless). Before they found out, disease, starvation and misadventure took 67 out of 105 of the settlers the first year. - 800 more settlers arrived in 1609 under Virginia Company o The following spring, frontier hardships cut settlers from 838 to 60. - An Indian attack took the lives of 500 settlers causing a royal investigation in 1623. o Reported of 6,000 settlers about 4,000 had died with a life expectancy averaging 2 years. - Virginia Company accumulated investment worth £200,000 ($22 million today), all lost. - A permanent settlement was needed to be successful. - Discovery of “cash crops” or other items that could be produced in the colonies and exchanged commercially was essential. (rice and tobacco) - All of the joint-stock companies excluding the Hudson Bay Company survived less than two decades. - Early Jamestown settlers were brought over by the company and given “planter shares” with profits to be divided 5 years later. o Meanwhile they lived at the company’s expense and work for the company. o They worked collectively; later they realized this encouraged individuals to work less and resulted in much discontent. Stifled incentives to care for the land, single men complained for earning same as married men. - 1609 & 1612 small garden plots of land were given to settlers. - 1614 land increased to 3 acres for a settler. - 1618 Headright System established – Any settler who paid his own voyage was given 50 acres and 50 acres for every other person paid. - 1623 all land converted to private ownership - 1625, Virginia was converted to a Crown colony. - British Empire in North America extended from French Canada to Spanish Florida and through to the sugar plantation islands of the Caribbean. - In the 17th century, cost of the Atlantic passage was £9-10/person, more than an average English person’s yearly income. Later dropped to £5-6. - By 1775 more than half a million had traveled with about 350,000 by indenture contracts (IOU). o Prospective immigrants would sign articles of indenture binding them to a period of service that varied from 3-7 years, 4 being the most common.- Slavery did not become an important source of labor until after 1650, first appeared around 1620.’ o South Carolina had the largest population (60%) of blacks. - When Jamestown was founded, 300,000 Native Americans existed. Diseases and war caused the number to drop to between 50,000 and 100,000. Chapter 7 - The Revolutionary War, which began on April 19, 1775, dragged on for more than 6 years. o


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FSU ECO 3622 - EXAM 1

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