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FHCE 3100: Final Exam
Economy
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"one who manages a household"
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Economics
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study or science of production, distribution, and consumption
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Consumers
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individuals who obtain, use, maintain, and dispose of goods and services to fulfill satisfaction
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Adam Smith
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founder of modern economics; wrote "An Inquiry into the Nature and Causes of the Wealth of Nations"
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Capitalism
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system based on the recognition of individual rights
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Consumerism
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the belief that goods give meaning to individuals and their roles in society
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Injurious Consumption
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negative in the long run
ex. cigarette smoking
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Caveat Emptor
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"may the buyer beware"
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Needs
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barest minimum physical necessities that allow you to survive
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Wants
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What people would acquire if their resources were unlimited
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Self-Actualization
Esteem
Relational
Safety
Physical
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Maslow's hierarchy (in order that needs to be fulfilled
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Awareness, Thinking, Planning, Implementing, Evaluating
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Consumption Process
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Awareness
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CP: "stimulus" that lets us know that something is needed or desired
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Thinking
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CP: the mental exploration of the possibilities; weighing pros and cons and gathering info about the product in question
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Planning
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CP: deciding ordered steps of action needed to make the purchase a reality
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Implementing
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CP: Taking the money to purchase product
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Evaluating
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CP: spend time reflecting on outcome
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Consumer Sovereignty
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consumers decide which goods survive in the market
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Rational Choice Theory
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assumes that individuals choose the best action according to stable preference functions and constraints facing them
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Conspicuous Consumption
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paying an extremely high price for a product for its prestige value
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Consumer Movement
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policies aimed at regulating products, services, methods, and standards of manufacture, selling, advertising in the interests of the buyer
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Ralph Nader
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wrote "Unsafe at Any Speed"; advocate for seatbelts
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Esther Peterson
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advocate for workers' rights --> equal pay for equal work; also advocate for nutrition labels
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Susan B. Anthony; 1837
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Asked for equal pay for women teachers in this year
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Seneca Falls
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Location of first women's rights meeting
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Lucy Stone
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first woman to achieve a college degree and marry and keep her last name
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Elizabeth Cady
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asked for the word "obey" to be removed from marriage vows
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Dec 10, 1869
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Wyoming territory passed a law permitting women to vote on this date
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1920
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19th amendment passed this year
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Victoria Woodhull
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First woman to run for prez
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1906
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Legislature set the maximum hours of labor for children to 60 hours
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1938
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regulation of child labor achieved in fair labor standards act
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Muckrakers
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american journalists who attempted to expose the abuses of business and the corruption in politics
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Harvey Wiley
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chemist at U.S. dept of ag; father of the pure foods and drugs act
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Federal Communications Commission
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regulates communications by radio, tv, satellite, and cable
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Food, Drug, and Cosmetic Act
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regulates product ingredients
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Pres Kennedy
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enunciated consumer bill of rights
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right to safety
right to be informed
right to choose
right to be heard in gov't in decision making
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rights given in the consumer bill of rights
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Consumer Product Safety Commission
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established in 1972 to protect the public from unreasonable risk of injury caused by consumer products
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1906; 1938
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years the FDA was created and amended
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FDA
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charged with ensuring that processed foods, drugs, medical devices, and cosmetics are safe and properly labeled, that foods are wholesome, and that drugs are effective
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Federal Fair Packaging and Labeling Act
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requires that packages be labeled truthfully with such basic facts as quantity and ingredients
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Federal Truth in Lending Act
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requires that consumers be told in clear, accurate, and uniform terms how much it costs them to borrow money from a lender
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Federal Trade Commission
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bears primary responsibility for making sure that advertising and labeling are not false or misleading
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Esther Peterson
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first appointee to the post of White House Consumer Advisor
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"The Silent Spring"
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book that inspired widespread public concerns with pesticides and pollution of the environment
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Rachel Carson
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wrote "The Silent Spring"; godmother of the environmental movement
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Credit Card Act of 2009
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regulates interest rate hikes, sets fee caps, sets age limits, controls funky wording, and prevents double cycle billing
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Imperfect Information
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seller know more than the buyer about a product
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Federal Consumer Information Center
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develops, promotes, and distributes useful information to the public goal to reduce highway deaths, injuries, and property losses
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FDIC
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maintains the stability and public confidence in the nation's financial system by insuring deposits, examining and
supervising financial institutions, and managing receiverships
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SEC
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protect investors and maintain integrity of the securities market watches for fraud and deception require companies to disclose information
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Thomas Vilsack
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current secretary of ag
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Governor of Iowa
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Vilsack's position before current
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Dept of Justice
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works with the FTC in enforcing the Sherman Anti-trust law
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Special Interest Groups
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Those determined to encourage or prevent changes in public policy without trying to be elected
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Nongovernmental Proconsumer Groups
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Enlightened companies and consumer protection
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"Consumers Union"
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a private organization which does product testing and publishes Consumer Reports
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National Consumers League
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the oldest consumer organization in the United States and
works to provide information to consumers
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Housing Affordability Index
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Median family income/annual income needed to buy a home
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Cooperatives
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corporate-owned dwellings in which the residents are shareholders and own stock representative of the value of their unit
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Condominiums
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residents have sole ownership of the living space but joint ownership of the land and common areas
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Planned Unit Developments
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you own the home and land it sits on as well as shared ownership of the development
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Monthly housing expense < 28% of gross monthly income
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Front end ratio
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Housing expenses + other debt < 36% gross monthly income
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Back end ratio
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30 days after end of lease
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Security deposit return date
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3.60%
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percentage of GDP contributed by auto industry
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2006
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year Consumer Reports list of top 10 cars were all foreign
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Ford, GM, Chrysler
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The Big Three
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$50 million
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amount spent by big three to lobby congress in 2008
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$1.01
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price of Ford's share of stock
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General Motors
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pulled off the biggest initial public offering in US history on 11/17/10
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Jobs Bank
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account big three paid into to provide salaries for people whose jobs were taken by technology
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Bank Holding Company
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A firm that owns one or more banking firms
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Andrew Jackson
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Prez who vetoed the rechartering of the Second Bank of the U.S.
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Banking Act of 1933: Glass-Steagall
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separated banking and securities activities; commercial banks weren't allowed to lend and vice versa
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CDs
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safe way store money; time deposit that can liquidate between 7 days and several years
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Chip Cards
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cards with stored value (UGA card-bulldog bucks)
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Collateral
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property used to secure a loan
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Lien
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legal rights to take and hold prop if a person doesn't pay off debt
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Interest
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cost of using money
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1863
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the office of the comptroller was established in..
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1933
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year congress established the FDIC
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Regulatory Capital
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capital requirements are imposed by the gov't to ensure that banks hold sufficient capital
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Capital adequacy
Asset quality
Management
Earnings
Liquidity
Sensitivity to market risk
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CAMEL rating
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Truth in Lending Act
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requires financial institutions to reveal annual percentage yield/rate, fees charged, info about loan balance, pmt due, and total amt charged
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Value of bank falls (assets<liabilities)
Deposit outflow
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Two reasons for bank failure
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Moral Hazard
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agents who are insured will tend to take fewer precautions to avoid risk they are insured against
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2,900 failed (one every 15 days); one out of every 6 banks closed total
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Magnitude of 1980s Banking Crisis
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Alan Greenspan
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former Federal Reserve Chairman who thought "regulation was harmful"
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Gramm-Leach-Biley Act of 1999
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legislation to eliminate Glass-Steagall
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Securitization
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the transformation of illiquid assets into marketable capital market instruments
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Factor 1: gov't regulations began to erode the conventional lending standards
Factor 2: feds manipulated the interest rates during 2002-2006
Factor 3: doubling of the debt/income ratio
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3 factors causing Crisis of 2008
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Complementarity
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when one bank fails, other banks are in trouble
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Substitutability
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when one firm falls, good for the others (non-bank firms)
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