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Political Science > Exam 4 - American Economy > Flashcards

Exam 4 - American Economy Flashcards

1
Q

what are institutions?

A

rules and norms that govern behavior

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2
Q

examples of political institutions?

A

voting
political parties
congress

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3
Q

what is a political economy?

A

the relationship between political and economic institutions in a particular country as well as the policies and outcomes they create

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4
Q

Economic institutions affect politics & politics affect economic institutions (T/F)

A

TRUE

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5
Q

different systems come together to achieve one end (T/F)

A

FALSE
each system is used to achieve different ends

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6
Q

examples of systems in political economy (4)

A
  1. capitalism
  2. socialism
  3. communism
  4. mercantilism
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7
Q

capitalist countries are all the same (T/F)

A

FALSE
there are different varieties of capitalism in capitalist countries

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8
Q

what is a market?

A

where exchange of goods or service occurs

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9
Q

what is a property?

A

something that is owned by an individual (private).
can be land, good, intellectual

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10
Q

what is a public good?

A

something that is available to everyone (cannot be restricted) and whose consumption does not reduce its availability from others.

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11
Q

examples of public goods (3)

A
  1. air
  2. freeways
  3. natural defense
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12
Q

what are social expenditures?

A

government spending to redistribute wealth to provide for public goods

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13
Q

what are examples of social expenditures? (4)

A
  1. SNAP
  2. public schools
  3. highways
  4. funding for national parks
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14
Q

what is free trade?

A

no barrier to trade, trade with anyone

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15
Q

what are the 2 cons of barriers within trade?

A
  1. makes trade expensive
  2. makes trade unequal
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16
Q

what is GDP (gross domestic product)?

A

the total value of all goods and services produced in ONE YEAR

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17
Q

why do we use GDP? (2)

A
  1. used to see if the overall economy is growing from year to year
  2. used to compare growth with other countries
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18
Q

what is a problem with GDP?

A

does not tell us how this growth is distributed

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19
Q

what is GDP per population?

A

is the average of the economy

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20
Q

what does GDP per capita assume?

A

its assumes that every person has contributed equally and has a fair share

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21
Q

what is the problem with GDP / capita?

A

distribution is not always equal

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22
Q

what are 2 types of trade barriers?

A
  1. tariffs
  2. non-tariff barriers
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23
Q

what are non-tariff barriers?

A

ways to make trade harder that are not taxes

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24
Q

what are 2 examples of non-tariff barriers?

A

quotas & embargo

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25
quota =
a limit on items that are coming in
26
Free trade is only beneficial to ONE party. (T/F)
FALSE trade is beneficial to both parties
27
how is free trade beneficial to all parties?
increasing trade --> more trade --> more production --> more jobs --> more income/ more spending = positive cycle
28
when do countries engage in free trade?
after they develop their economy (post WW2)
29
why do countries implement barriers in trade?
to protect their domestic industry by making foreign products more expensive
30
tariffs =
taxes
31
give an example of barriers on a foreign good.
during Trumps administration their was a tariff implemented on steel to make Chinese steel more expensive and ideally less attractive to users than American steel
32
what are some standards of trade? (3)
1. we do not like to buy products made by child labor or sweatshops 2. quality control 3. sustainable products and more market for second hand shopping
33
embargo =
official ban on trade with another country
34
the US economy is shifting towards a more ...
service and finance economy
35
what is capitalism?
a system that relies on the market with limited state involvement
36
function of the market in capitalism?
the market is used to set prices through supply and demand
37
what is the belief within capitalism?
belief in private property and ownership
38
the belief that limited state involvement can allow for ..., in a capitalist economy?
limited state involvement means that individuals can maximize individual freedom and wealth
39
what is the role of the state (govt) in a capitalist economy?
govt is only meant to protect private property
40
there are some Pure capitalist countries in the world (T/F)
FALSE
41
what 2 countries are the closest to being pure capitalist?
The US and England
42
what type of economy is the US?
a Liberal Market Ecnomy
43
what is the role of the govt (state) in a liberal market economy?
weak state with little autonomy and capacity
44
what is the role of states in a liberal market economy
limited involvement other than securing property rights
45
what is the role of the market in a liberal market economy?
sets the prices
46
laissez faire
translates to "let it be" "let the market sort it out"
47
what are the 2 main consequences of the liberal market economy?
1. no support for specialized training / education (Votech) 2. weak trade unions/ labor unions
48
how was the US economy pre-WW1
the state was more involved pre-WW1 in the US economy
49
the US was early in developing the central bank (T/F)
FALSE the US was late developing a central bank
50
the central bank of the US is called
the federal reserve
51
states planned the economy pre-WW1 (T/F)
FALSE
52
what was the role of states in regards to the economy, pre-WW1?
it kept competition out which contributed to no free trade which led to economic growth
53
what occurred during WW1 in regards to politics and economics?
the US was more involved example: NATO and WTO
54
was there any economic growth after WW1, in the US?
YESS
55
what was the currency exchange rate after WW2?
the gold standard
56
what was the gold standard?
1 oz of gold = $22
57
what currency exchange rate was created after the gold standard was no longer working?
the FLOATING EXCHANGE RATE
58
we do NOT use the floating exchange rate today (T/F)
FALSE
59
what was the govt involvement in the economy during WW1?
the govt had control over several industries
60
Before Regan's presidency, we where (in regards to the economy) (2)
1. the largest producing country 2. largest debtor nation
61
did we have lower or higher taxes during Regan's presidency?
Lower taxes
62
what happens when we pay lower taxes?
1. less social welfare 2. more welfare given via tax criedts
63
how did the economy shift under Regan? what did it reflect?
the economy shifted from a more producing and lending to production and BORROWING under Reagan reflects the boom of the financial industry
64
what is currency?
used as a medium for exchange for trade
65
what is the floating exchange rate?
when currency value is determined by how much you can buy in another currency
66
what are the 3 main factors that determines the floating exchange rate?
1. how much money is in circulation 2. credit ratings 3. reserves
67
what are the 3 functions of the federal reserve?
1. prints money 2. determines interest rates 3. lender of last resort
68
what are interest rates?
how much it cost to borrow money
69
what is the function of a lender of last resort? (2)
1. does not charge interest 2. is trying to stabilize interest to stabilize the economy
70
all countries have a central bank (T/F)
FALSE
71
every currency has a central bank (T/F)
TRUE
72
what happened during the 2008 financial crisis?
the housing market burst
73
why do banks need to be bailed out?
because they are the foundation of the economy
74
what did Obama do during the 2008 financial crisis? was it beneficial
sent out 2 stimulus package - neither where big enough - republicans in congress would not pass a bigger stimulus check
75
during the 2008 financial crisis govt spending
did not equal household spending
76
There were changes as a result of the 2008 Financial crisis (T/F)
FALSE there were no changes in financial regulations
77
How does the market set prices in a capitalistic economy
Through supply and demand

Political Science (18 decks)

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