Introduction to Political Science and Economics Flashcards

This set of vocabulary flashcards covers the core definitions and concepts of Political Science and Economics as presented in the lecture notes, including levels of analysis, types of goods, functions of money, and behavioral economics.

Political Science

The academic study of power, government, and how societies are governed, analyzing systems, institutions, and human behavior related to decision-making.

Politics

The practical process of allocating scarce resources in society, often summarized as “who gets what, when, and how.”

Political theory

A branch of political science that focuses on the study of ideas like justice and democracy.

Public policy

A branch of political science that examines government decisions and their impact on society.

Comparative politics

A branch of political science involving the comparison of different political systems.

International relations

A branch of political science that studies the interactions between different countries.

Individual level

A level of analysis in politics and economics that focuses on personal decisions, such as consumer choices.

State level

A level of analysis that examines government actions, such as policies on taxation or education in a specific country like the UAE.

International level

A level of analysis studying interactions between countries, such as trade agreements or conflicts.

Global level

A level of analysis looking at worldwide issues such as climate change or globalization.

Economics (Classical definition)

The study of the production, distribution, and consumption of goods and services.

Economics (Adam Smith's view)

A field concerned with wealth creation and improving living standards.

Economics (Etymology)

Derived from a Greek word meaning “management of a household.”

Positive analysis

Analysis based on facts that can be tested using data to describe what is happening in the economy (e.g., “inflation has increased by $5\%$”).

Normative analysis

Analysis based on opinions, values, and judgments about what the government or societies should do.

Economics (Discipline)

The academic study of how resources are allocated and how decisions are made under conditions of scarcity.

Economy

The actual system where production, consumption, and exchange of goods and services take place.

Market

The system or process where buyers and sellers interact to exchange goods and services.

Marketplace

The physical or digital location where economic exchanges occur, such as a shopping mall or online platform.

Scarcity

The limited availability of resources compared to unlimited human wants.

Choice

The act of selecting one option over others, which necessarily leads to trade-offs.

Value

The subjective importance or worth individuals assign to goods and services, often dependent on context and scarcity.

Economizing problem

The challenge of deciding how to allocate limited resources efficiently to maximize satisfaction.

Opportunity cost

The value of the next best alternative that is forfeited when a choice is made.

Mutually exclusive choices

Options where selecting one specific alternative means giving up the other.

Economic goods

Goods that are scarce and carry a price.

Non-economic goods

Goods that are abundant and free, such as air or sunlight.

Private goods

Goods that are both rival and excludable, consumed individually (e.g., a phone).

Public goods

Goods that are non-rival and non-excludable, such as street lighting, usually provided by the government.

Common goods

Goods that are rival but non-excludable, such as fish in the ocean, requiring regulation to prevent overuse.

Club goods

Goods that are excludable but non-rival, such as a Netflix subscription.

Barter system

A method of exchange where goods and services are traded directly without using money as a medium.

Double coincidence of wants

A limitation of the barter system where both parties must simultaneously want what the other is offering.

Money

A developed tool that provides a common medium of exchange, a standard unit of value, and a store of wealth.

Medium of exchange

A function of money that allows goods and services to be traded easily.

Measure of value

A function of money providing a standard for pricing and comparing the worth of different goods.

Store of value

A function of money that allow wealth to be saved and retrieved in the future.

Standard of deferred payment

A function of money that enables transactions and the settlement of debts over time.

Properties of Money

Essential characteristics including durability, divisibility, portability, acceptability, scarcity, and fungibility.

Bitcoin

A cryptocurrency that functions as a medium of exchange but is not fully considered money due to its instability in value and lack of universal acceptance.

Market failure

A situation where the market does not allocate resources efficiently, caused by externalities, public goods, monopoly power, or information failure.

Externalities

The unintended effects of economic activities on third parties, which can be positive (e.g., education) or negative (e.g., pollution).

Rationality

The economic assumption that individuals are logical, have clear preferences, and make decisions to maximize their satisfaction.

Normal goods

Goods for which demand increases as consumer income increases, such as clothes.

Inferior goods

Goods for which demand decreases as income increases, such as instant noodles.

Veblen goods

Luxury items, such as expensive cars, where demand is fueled by the desire for prestige.

Giffen goods

Rare staple goods, such as rice, bread, or potatoes, consumed by the poor that defy standard demand laws.

Behavioral economics

A branch of economics studying how psychological factors, emotions, and biases influence decision-making, acknowledging that people are not always fully rational.

Anchoring

A behavioral concept where individuals rely too heavily on the first piece of information offered (the “anchor”) when making decisions.

Nudging

A public policy tool used to guide people toward better decisions without forbidding options, such as automatic enrollment in savings plans.

Framing

A concept where the specific way information is presented affects how people respond and make choices.

Microeconomics

The branch of economics that focuses on the behavior and decisions of individuals and firms.

Macroeconomics

The branch of economics that studies the economy as a whole.

Institutional economics

An economic perspective focusing on laws, rules, and institutions, asserting that strong institutions lead to a stronger economy.