Chapter 4 Vocabulary (Textbook) Flashcards
Capitalism
A system of production based on private property and free markets. (Ex. UK, Nigeria, Mexico)
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. (Ex. UK —> Bank of England)
Comparative Advantage
The ability of one country to produce a particular good or service more efficiently relative to other countries’ efficiency in producing the same good or service. (Ex. China’s ability to produce cheap goods)
Deflation
A period of falling prices and values for goods, services, investments, and wages.
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. (UK past 20 years)
Gini Index
A statistical formula that measure the amount of inequality in a society; its scale ranges from 0 to 100, where 0 corresponds to perfect equality and 100 to perfect inequality.
Gross Domestic Product (GDP)
The total market value of all goods and services produced by a country over a period of one year.
Human Development Index (HDI)
A statistical tool that attempts to evaluate the overall wealth, health, and knowledge of a country’s people.
Hyperinflation
Inflation of more than 50 percent a month for more than two months in a row. (Venezuela)
Inflation
An outstripping of supply by demand, resulting in an increase in the general price level of goods and services and a consequent loss of value in a country’s currency.
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.
Market
The interaction between the forces of supply and demand that allocate resources.
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. (Iran)
Monopoly
A single producer that is able to dominate the market for a good or service without effective competition. (Gazprom in Russia)
Nontariff Regulatory Barriers
Policies and regulations used to limit imports through methods other than taxation.
Parastatal
Industry partially owned by the state.
Political-Economic System
The relationship between political and economic institutions in a particular country and the policies and outcomes they create.
Political Economy
The study of the interaction between states and markets.
Property
Goods or services that are owned by an individual or a group, privately or publicly.
Public Goods
Goods, provided or secured by the state, available to society, and which no private person or organization can own. (Primary education in the UK)
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.
Quota
A nontariff barrier that limits the quantity of a good that may be imported into a country.
Regulation
A rule or an order that sets the boundaries of a given procedure.
Social Expenditures
State provision of public benefits, such as education, healthcare, and transportation.
Tariff
A tax on imported goods.
