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The interaction between the forces of supply and demand that allocates resources
What are markets? What is the relationship between states and markets?
Property owned by a specific person. Personal car, water bottle
What is private property? Examples.
Goods, provided or secured by the state, available to society, and which no private person or organization can own
Public Parks and Roads
What are public goods? What are the two criteria for determining whether something is a public or private good. Examples.
The states spending on public benefits. Incites furious debates over who benefits from, and pays for, public goods. One major source of public funding and public debate taxation
Why does the state conduct social expenditures?
For public funding
Why do states tax their subjects?
Gross Domestic Product
What is GDP?
To manage money, states may rely on a central bank, a state institution that controls the flow of money and how much it costs to borrow money in that economy.
A central bank tries to avoid too much inflation (when prices rise because there is too much money and not enough goods)
Inflation- the rise in prices decreases the purchase
Deflation - The drop in prices that increases purchasing power.
How does a central bank control an economy? What is inflation and deflation? What are the problems with each? Is one worse than another?
They provide a framework, protect consumers, and ensure financial stability
How do states regulate markets?
A single producer that is able to dominate the market for a good or service without effective competition
What is a monopoly?
Trade is often focus of regulation, we use tariffs (taxes on imported goods), quotas and other nontarriff regulatory barriers (helath, packaging, and other restrictions to make it more difficult for good to be traded) to help its economy.
How do states use tariffs, quotas, and non-tariff barriers to regulate trade? What are the arguments over the regulation of trade? Pro? Anti?
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
What is comparative advantage? Example.
The relationship between political and economic institutions in a particular country and the policies and outcomes they create
What is a political economy system?
Liberalism- emphasizes individual freedoms over collective equality and the power of markets over the state. Liberals favor free markets and strong protections for private property
Social Democracy- Wants to balance economic freedom and equality. SOcial Democrats argue that free markets should be checked by the state and that the state should provide more public goods like healthcare and education.
Communism- Wants collective equality over individual freedom. The state controls all aspects of the market, including property, labor, and trade, and guarantee employment, health care, education, and ther services.
Mercantilism- Favors neither freedom nor equality rather focusing on economic growth to increase the power of the state
Anarchism- Rejects the idea of the state entirely, believes both government and capitalism limit freedom and equality
What are the 5 different types of political economic systems? What are the main points of each? Examples of states where each system exists.
A system of production based on private property and free markets
What is capitalism?
The principle that the economy should be "allowed to do" what it wishes; a liberal system of minimal state interference in the economy
Laissez faire?
Industry partially owned by the state
What are parastatals?
modern form of corporatism, adapted to a democratic context, in which the state collaborates with and formally incorporates a limited number of major, centralized interest groups—most notably labor unions and employer associations—in the formulation and implementation of public policy.
What is neocorporatism?
Social democracies seek to achieve greater equality by combining free markets with strong government intervention.
They use progressive taxation and social welfare programs to redistribute wealth, provide universal healthcare and education, and protect workers’ rights through labor laws and unions.
This system aims to balance economic freedom with social justice and ensure equal opportunities for all citizens.
How do social democracies seek to achieve greater equality?
by maximizing exports and minimizing imports to accumulate wealth, especially in the form of gold or foreign reserves.
Governments control trade through tariffs, subsidies, and monopolies to protect domestic industries and promote national production.
The main goal is to make the state economically self-sufficient and powerful compared to rival nations.
How do mercantilist states seek to achieve economic power?