Chapter 4 - Political Economy

Question 1

Political Economy

Answer 1

Study of how Economics and Politics are related and shape the between freedom and equality.

Question 2

Markets

Answer 2

Interactions between the forces of supply and demand. Allocation of resources through these forces interacting. These forces create values for goods and services.

Question 3

Property

Answer 3

Ownership of goods and services exchanged through markets. Land, buildings, businesses, or personal items.

Question 4

Public Goods

Answer 4

Defined as good provided or secured by the state. Provided for society and indivisible.

Question 5

Social Expenditures

Answer 5

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

Question 6

Gross Domestic Product

Answer 6

Total market value of goods and services produced by one country in a year.

Question 7

Money

Answer 7

Medium of exchange. Not necessarily equivalent to wealth. States create money such that value can be transferred. Only a tiny fraction of wealth in the world.

Question 8

Wealth

Answer 8

How much one owns in overall value in property that has value.

Question 9

Central Bank

Answer 9

Controls how much money flows through the economy and how much it costs to borrow money.

Question 10

Inflation

Answer 10

Defined as an increase in overall prices in the economy when demand outstrips supply. Wages and savings lose value. Higher wages and benefits are demanded to offset.

Question 11

Deflation

Answer 11

Decrease in overall prices in the economy when supply outstrips demand. Businesses cannot make money.

Question 12

Hyperinflation

Answer 12

Inflation higher than 50% a month for more than 2 months in a row. States print tons of money.

Question 13

Regulation

Answer 13

Rules or orders that set the boundaries of a given procedure. Economic - Control prices, control what firms may operate in certain markets. Social - focus on how businesses function in the market.

Question 14

Quotas

Answer 14

Limit quantity of good coming into a country

Question 15

Monopoly

Answer 15

A market controlled by a single producer

Question 16

Tariff

Answer 16

tax on imported goods

Question 17

Non-tariff regulatory barriers

Answer 17

Health, packaging, or other restrictions to protect citizens and make it difficult or expensive to sell foreign goods in domestic market.

Question 18

Comparative Advantage

Answer 18

The ability to produce a certain good more efficiently than other countries.

Question 19

Political-economic system

Answer 19

4 of them. Relationship between political and economic institutions in a particular country, as well as the policies and outcomes they create.

Question 20

Liberalism

Answer 20

Focus on Laissez-faire and capitalism. Small government. Individual freedom.

Question 21

Social Democracy

Answer 21

Wealth redistribution. Wide array of public goods should be provided by the state. Social democracy should own some sectors of economy.

Question 22

Neocorporatism

Answer 22

A system of policy making involving the state, labor, and businesses.

Question 23

Communism

Answer 23

Complete control of the market. Assign jobs and produces goods. Provides everything. Collective equality.

Question 24

Mercantilism

Answer 24

No focus on liberty and equality. Emphasis on furthering the state. National economic power and domestic economy important to generating power for the state.

Question 25

Purchasing Power Parity

Answer 25

Estimation of buying power in each country.

Question 26

Gini index

Answer 26

Mathematical formula that measures the amount of economic inequality in a society.

Question 27

Human Development Index

Answer 27

Overall wealth, distribution of wealth, income, health, and educational indicators.