Chapter 4

Question 1

The study of the interaction between states and markets

Answer 1

Political Economy

Question 2

The interaction between the forces of supply and demand that allocates resources.

Answer 2

Markets

Question 3

goods and services that are owned by an individual or a group, privately or publicly.

Answer 3

Property Rights

Question 4

Property is not always tangible (Car, house, phone). Refers to ownership of a specific type of knowledge or content—a song, a piece of software code, or a treatment for diabetes.

Answer 4

Intellectual Property

Question 5

Goods, provided or secured by the state, available to society, and which no private person or organization can own

Answer 5

Public goods

Question 6

Education and unemployment or retirement benefits

Answer 6

Public goods examples

Question 7

State provisions of the public benefits, such as education, health care, and transportation.

Answer 7

Social Expenditure

Question 8

the state’s provision of public benefits, such as education, health care, and transportation.

Answer 8

Welfare/Welfare State

Question 9

The state institution controls how much money is flowing through the economy as well as how much it costs to borrow money in that economy.

Answer 9

Central Bank

Question 10

The rate is charged to private banks when they need to borrow funds from the central bank or one another.

Answer 10

National Interest Rate

Question 11

An outstripping of supply by demand, results in an increase in the general price level of goods and services and consequent loss of value in a country’s currency.

Answer 11

Inflation

Question 12

Inflammation of more than 50 percent a month for more than two months in a row.

Answer 12

Hyperinflation

Question 13

A period of falling prices and values for goods, services, investments, and wages.

Answer 13

Deflation

Question 14

A rule or an order that sets the boundaries of a given procedure.

Answer 14

Regulation

Question 15

A single producer that can dominate the market for a good or service without effective competition.

Answer 15

Monopoly

Question 16

A tax on imported goods

Answer 16

Tariffs

Question 17

A nontariff barrier that limits the quantity of a good that may be imported into a country.

Answer 17

Quotas

Question 18

Policies and regulations are used to limit imports through methods other than taxation.

Answer 18

Non-Tariff Regulatory Barriers

Question 19

The ability of one country to produce a particular good or service more efficiently relative to other countries’ efficiency in making the same good or service.

Answer 19

Comparative Advantage

Question 20

A political economic system in which national economic power is paramount and the domestic economy is viewed as an instrument that exists primarily to serve the needs of the state.

Answer 20

Mercantilism

Question 21

A political economic system in which freedom and equality are balanced through the state management of the economy and the provision of social expenditures; a political ideology that advocates such a system.

Answer 21

Social democracy

Question 22

A political attitude that favors evolutionary transformation; an ideology and political system that favors a limited state role in society and the economy and places a high priority on individual political and economic freedom.

Answer 22

Liberalism

Question 23

A political system in which all wealth and property are shared to limit exploitation, oppression, and, ultimately, the need for political institutions such as the state; a political ideology that advocates such a system.

Answer 23

Communism

Question 24

The relationship between political and economic institutions in a particular country and the politics and outcomes they create.

Answer 24

Political Economic system

Question 25

The principle that the economy should be “allowed to do” what it wishes; is a liberal system of minimal state interference in the economy.

Answer 25

Laissez Faire Economics

Question 26

The term to describe mercantilist systems.

Answer 26

“State Capitalism”

Question 27

A political economic system in which national economic power is paramount and the domestic economy is viewed as an instrument that exists primarily to serve the needs of the state.

Answer 27

Mercantilist

Question 28

A statistical tool that attempts to estimate the buying power of income across different countries by using prices in the United States as a benchmark.

Answer 28

Purchasing Power Parity (PPP)

Question 29

Gini Index

Answer 29

A statistical formula that measures the amount of inequality in a society; its scale ranges from zero to 100, where zero corresponds to perfect equality and 100 to perfect inequality.

Question 30

A statistical tool that attempts to evaluate the overall wealth, health, and knowledge of a country’s people.

Answer 30

Human Development Index (HDI)

Question 31

Developed by the social scientist Richard A. Easterlin the idea that when standards of living rise past a certain level (perhaps $10,000–$15,000 per capita GDP), happiness stagnates.

Answer 31

Easterlin Paradox