Economics: A Pluralist Definition – Vocabulary Flashcards

Vocabulary flashcards covering key terms from the lecture notes on economics.

Economics (pluralist definition)

The social science that studies how societies allocate scarce resources to satisfy unlimited wants, drawing on both mainstream economics and political economy (including PPE and RPE).

Mainstream economics (ME)

The study of how society uses simplifying assumptions and mathematical models to analyze costs, benefits, and rational choices, testing predictions with data.

Political economics (PE)

The study of how different groups and power relations shape the production, distribution, and surplus within an economy, including PPE and RPE.

Progressive political economics (PPE)

A strand of PE focusing on social provisioning, culture, history, and technology to understand how the economy serves society’s needs.

Radical political economics (RPE)

A PE approach studying power, class, and conflict over resource allocation and how crises arise from class relations.

Austerity

Policy of cutting government spending and/or raising taxes to balance the budget, often during a recession, which can worsen downturns.

Recession

A period when the economy experiences a decline in real GDP, typically accompanied by rising unemployment and falling spending.

Real GDP (real gross domestic product)

Total value of all goods and services produced in an economy, adjusted for inflation.

Scarcity

The fundamental economic problem that wants exceed resources, forcing trade-offs and choice.

Opportunity cost

The value of the next-best alternative forgone when a choice is made.

Production Possibilities Curve (PPC)

A model showing all combinations of two goods that can be produced with fixed resources and technology, illustrating trade-offs and efficiency.

Capital goods

Machinery, buildings, and other inputs used to produce goods and services in the future; growth-enhancing assets.

Consumer goods

Goods purchased for final use by consumers; do not directly increase future productive capacity.

Law of increasing opportunity cost

As production of a good expands, the opportunity cost of producing additional units rises due to resource specialization.

Specialization of resources

Dividing resources to tasks they are best suited for; leads to curved PPC and affects opportunity costs.

Shifts in the PPC

Outward PPC shift indicates growth from more resources or better technology; axis-specific shifts occur when new resources improve production of one good more than the other.

Surplus product

The amount produced beyond what is needed for survival; fuels growth and power structures by enabling investment.

Private property rights

Legal rights to own, use, and transfer productive resources; crucial for investment and market development.

Enclosure movement

Process of converting common lands into private property, enabling labor markets and urbanization.

Guilds

Medieval trade associations that regulate production, standards, and prices, often limiting innovation.

Putting-out system

Mercants supply materials to artisans who finish goods; precursor to capitalist factories.

Mercantilism

National market system controlled by monarchs and merchant-capitalists, emphasizing exports, bullion, monopolies, and colonial trade.

Monetization of the economy

Shift from in-kind payments to money-based transactions and wage labor.

Traditional economies

Hunter-gatherer or reciprocal systems where resources are allocated by community patterns and redistributive practices.

Feudalism

A system of lords, serfs, and manors with self-sufficient estates, tradition, and limited trade; strong role for authority.

Capitalism

An economic system with private ownership of resources and production for profit, guided by markets.

New Keynesian economics (moderate ME)

Mainstream view that markets work but need government regulation to fix failures and improve efficiency.

Positive economics

A scientific approach to studying the economy, aiming to identify facts and predictions through models and data.

Ceteris paribus

Latin for 'all other things equal'; an assumption that other factors remain constant when analyzing relationships.

Demand curve

Graph showing the downward-sloping relationship between price and quantity demanded.

Institutional analysis (political economy)

Examines how formal laws, organizations, and informal culture shape economic choices and outcomes.

Economic growth drivers

Contributors to growth: increases in labor (L), capital (K), and productivity (technology/human capital).