Test 1 Flashcards
(45 cards)
what are the 3 parts of an economic system
- the economy
- government
- civil society
what determines the political order of a country
- location
- history
- technology
- institutional coherence
what is path dependency
when actions in the present are constrained by actions from the past
what is a collective action problem
when would be better off cooperating but don’t because of conflicting self interest
what is the tragedy of the commons
when people act in their self interests with a common pool good (rival/non-excludable)
what is opportunistic behavior
self interest seeking behavior at the expense of other people
what are the 6 criteria for an economic system to be successful
- prosperity
- freedom
- justice
- stability
- sustainability
- human development
how to economics systems succeed
they have a surplus of resources and reinvest it
what are the different types of capita
- physical capital
- financial capital
- human capital
- social capital (EX: trust in society)
what are the 4 types of states
- predatory state
- Laissez Faire state
- failed state
- development state
what are the aspects of a failed state
- the state is dominated by war lords
- government lacks ability to carry out responsibilities
what are the aspects of a predatory state
- a social or interest group controls the state
- group uses its power to extract wealth from the rest of the population
EX: stalin USSR
what are aspects of a laissez faire state
- provides minimal services but is still good
- works with high levels of trust in society
- private interest groups do not have incentive to corrupt government
what are aspects of a developmental state
- provides extensive services past minimal ones
- private interests are important but are not able to corrupt the government
what are the 3 things needed to be a developmental state
- impersonal state (based on merit)
- rule of law
- mechanisms of accountability (checks and balances)
what is rule by law
where some people are above the law unlike rule of law
what are weaknesses of markets
- reduced prosperity (monopolies/oligopolies can increase prices on people)
what is tacit collusion
when there isn’t an outright attempt to collude but achieve and agreement on price
what is a cartel
a group of firms that collude to set prices
what is rent seeking
growing a persons wealth by manipulating the social environment without creating new wealth. EX: lobbying congress to add 10 cents to a sugar tariff to suppress foreign competition/ asking for a grant specifically for the company
what are the 2 different types of freedom
- negative freedom
- positive freedom
what is negative freedom
freedom from outside intervention EX: having the choice to have vaccinations to attend school
what is positive freedom
intervention to be more free EX: government opening the opportunity to afford to go to college
what are the 2 different political ideologies
- classical liberal (Hyeck and Freidman)
- progressive liberal (Keynesian)
