Chapter 4 Flashcards
Political economy
The study of the interaction between states and markets
Market
The interaction between the forces of supply and demand that allocates resources.
Property
The ownership of anything tangible or intangible includes but is not limited to land, buildings, businesses, or personal items.
Public Goods
Goods, provided or secured by that state, available to society, and which no private person or organization can own.
Social expenditures
State provision of public benefits, such as education, health care, and transportation.
Gross domestic product (GDP)
The total market value of all goods and services produced by a country over a period of one year.
Central bank
The state institution that controls how much money is flowing through the economy as well as how much it costs to borrow money in that economy.
Inflation
An increase in the general price level of goods and services in the economy.
Hyperinflation
Inflation of more than 50 percent a month for more than two months in a row.
Deflation
A decline in the prices of goods and services.
Regulation
A rule or an order that sets the boundaries of a given procedure.
Monopoly
A single producer that is able to dominate the market for a good or service without effective competition.
Tariff
A tax on imported goods
Quota
A nontariff barrier that limits the quantity of a good that may be imported into a country.
nontariff regulatory barriers
Policies and regulations used to limit imports through methods other than taxation.
Comparative advantage
The ability of one country to produce a particular good or service more effectively relative to another country’s efficiency in producing the same good or service.
Political-economic system
The relationship between political and economic institutions in a particular country and the policies and outcomes they create.
laissez-faire
The principle that the economy should be “allowed to do” what it wishes; a liberal system of minimal state interference in the economy.
Capitalism
A system of production based on private property and free markets.
Mercantilism
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.
Parastatal
Industry partially owned by the state.
Purchasing power parity (PPP)
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.
Gini index
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.
Human Development Index (HDI)
A statistical tool that attempts to evaluate the overall wealth, health, and knowledge of a country’s people.
Economic liberalization
Changes consistent with liberalism that aim to limit the power of the state and increase the power of the market and private property in an economy.
