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Political Science > Exam 4 - American Economy > Flashcards

Exam 4 - American Economy Flashcards

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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
Q

quota =

A

a limit on items that are coming in

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26
Q

Free trade is only beneficial to ONE party. (T/F)

A

FALSE
trade is beneficial to both parties

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27
Q

how is free trade beneficial to all parties?

A

increasing trade –> more trade –> more production –> more jobs –> more income/ more spending = positive cycle

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28
Q

when do countries engage in free trade?

A

after they develop their economy

(post WW2)

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29
Q

why do countries implement barriers in trade?

A

to protect their domestic industry by making foreign products more expensive

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30
Q

tariffs =

A

taxes

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31
Q

give an example of barriers on a foreign good.

A

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
Q

what are some standards of trade? (3)

A
  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
Q

embargo =

A

official ban on trade with another country

34
Q

the US economy is shifting towards a more …

A

service and finance economy

35
Q

what is capitalism?

A

a system that relies on the market with limited state involvement

36
Q

function of the market in capitalism?

A

the market is used to set prices through supply and demand

37
Q

what is the belief within capitalism?

A

belief in private property and ownership

38
Q

the belief that limited state involvement can allow for …, in a capitalist economy?

A

limited state involvement means that individuals can maximize individual freedom and wealth

39
Q

what is the role of the state (govt) in a capitalist economy?

A

govt is only meant to protect private property

40
Q

there are some Pure capitalist countries in the world (T/F)

A

FALSE

41
Q

what 2 countries are the closest to being pure capitalist?

A

The US and England

42
Q

what type of economy is the US?

A

a Liberal Market Ecnomy

43
Q

what is the role of the govt (state) in a liberal market economy?

A

weak state with little autonomy and capacity

44
Q

what is the role of states in a liberal market economy

A

limited involvement other than securing property rights

45
Q

what is the role of the market in a liberal market economy?

A

sets the prices

46
Q

laissez faire

A

translates to “let it be”

“let the market sort it out”

47
Q

what are the 2 main consequences of the liberal market economy?

A
  1. no support for specialized training / education (Votech)
  2. weak trade unions/ labor unions
48
Q

how was the US economy pre-WW1

A

the state was more involved pre-WW1 in the US economy

49
Q

the US was early in developing the central bank (T/F)

A

FALSE
the US was late developing a central bank

50
Q

the central bank of the US is called

A

the federal reserve

51
Q

states planned the economy pre-WW1 (T/F)

A

FALSE

52
Q

what was the role of states in regards to the economy, pre-WW1?

A

it kept competition out which contributed to no free trade which led to economic growth

53
Q

what occurred during WW1 in regards to politics and economics?

A

the US was more involved
example: NATO and WTO

54
Q

was there any economic growth after WW1, in the US?

A

YESS

55
Q

what was the currency exchange rate after WW2?

A

the gold standard

56
Q

what was the gold standard?

A

1 oz of gold = $22

57
Q

what currency exchange rate was created after the gold standard was no longer working?

A

the FLOATING EXCHANGE RATE

58
Q

we do NOT use the floating exchange rate today (T/F)

A

FALSE

59
Q

what was the govt involvement in the economy during WW1?

A

the govt had control over several industries

60
Q

Before Regan’s presidency, we where (in regards to the economy) (2)

A
  1. the largest producing country
  2. largest debtor nation
61
Q

did we have lower or higher taxes during Regan’s presidency?

A

Lower taxes

62
Q

what happens when we pay lower taxes?

A
  1. less social welfare
  2. more welfare given via tax criedts
63
Q

how did the economy shift under Regan? what did it reflect?

A

the economy shifted from a more producing and lending to production and BORROWING under Reagan

reflects the boom of the financial industry

64
Q

what is currency?

A

used as a medium for exchange for trade

65
Q

what is the floating exchange rate?

A

when currency value is determined by how much you can buy in another currency

66
Q

what are the 3 main factors that determines the floating exchange rate?

A
  1. how much money is in circulation
  2. credit ratings
  3. reserves
67
Q

what are the 3 functions of the federal reserve?

A
  1. prints money
  2. determines interest rates
  3. lender of last resort
68
Q

what are interest rates?

A

how much it cost to borrow money

69
Q

what is the function of a lender of last resort? (2)

A
  1. does not charge interest
  2. is trying to stabilize interest to stabilize the economy
70
Q

all countries have a central bank (T/F)

A

FALSE

71
Q

every currency has a central bank (T/F)

A

TRUE

72
Q

what happened during the 2008 financial crisis?

A

the housing market burst

73
Q

why do banks need to be bailed out?

A

because they are the foundation of the economy

74
Q

what did Obama do during the 2008 financial crisis? was it beneficial

A

sent out 2 stimulus package
- neither where big enough
- republicans in congress would not pass a bigger stimulus check

75
Q

during the 2008 financial crisis govt spending

A

did not equal household spending

76
Q

There were changes as a result of the 2008 Financial crisis (T/F)

A

FALSE there were no changes in financial regulations

77
Q

How does the market set prices in a capitalistic economy

A

Through supply and demand

Political Science (18 decks)

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