Political Economy and the US Economic System

VOCABULARY flashcards covering the concepts of political economy, trade barriers, the US Federal Reserve, and different types of economic systems based on the lecture transcript.

Political Economy

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

Market

A physical or non-physical place where the exchange of goods or services occurs.

Private Property

Something owned by an individual, which can include land, goods, or intellectual property.

Intellectual Property

Materials such as lectures or study guides that are copyrighted and owned by an individual.

Public Goods

Goods provided by the state or country that are available to everyone and cannot be restricted, such as freeways, national defense, and clean air.

Social Expenditures

Government spending derived from taxes that is redistributed to public good programs like education and infrastructure.

Free Trade

The ability to trade for goods or services without additional barriers that make trade more difficult or expensive.

GDP (Gross Domestic Product)

The total value of all goods and services produced in a single country in one year.

GDP per capita

The total GDP of a country divided by its population to calculate the average for the economy.

Tariffs

Taxes placed on foreign products entering a country to protect domestic industries by making imports more expensive.

Non-tariff Barriers

Mechanisms other than taxes used to make trade more difficult or expensive, such as quotas, embargoes, and standards.

Quotas

A specific limit on the quantity of a product that can be imported and sold in a country within a given year.

Embargo

A trade barrier that bans or forbids trade with a specific country or a specific product, often used as a punishment.

Standards

Health, trade, or environmental requirements used as barriers to trade, such as banning toys with lead paint or products made with child labor.

Capitalism

An economic system based on rules and norms that relies on the market and private property with limited state involvement.

Liberal Market Economy

The type of capitalism in the United States characterized by a weak state government with little autonomy and capacity over the economy.

Federal Reserve

The central bank of the United States, responsible for printing money, setting interest rates, and serving as the lender of last resort.

FDIC (Federal Deposit Insurance Corporation)

Protection provided by the federal government that ensures consumer deposits in banks are protected up to a certain amount.

Gold Standard

A system where currency is pegged to gold; historically, the United States set an exchange rate where $22$ American dollars bought $1$ ounce of gold.

Floating Exchange Rate

A system adopted in the 1970s where the value of a currency is determined by how much it can buy of another currency.

Lender of Last Resort

The central bank's function of stepping in to bail out industries or the economy during an absolute crisis, as seen in the 2008 financial crisis.

Capitalism (Theoretical Goal)

The pursuit of individual freedom and wealth by minimizing government involvement to the protection of private property.