85 will be the minimum Flashcards
(73 cards)
Market Economy
individuals and firms exchanges goods and services without government interference.
Capitalism
Market economy plus private property.
Command Economy
Price, property and production controlled by the state.
Key Point
Rise of modern state coincided with market economy; when the economy became a free market, individuals have freedoms
Essential Roles of the State
Providing security, establishing and enforcing property and contract rights, creating and controlling currency.
Beneficial Roles of the state
infrastructure, education, healthcare and correcting market failures.
politically generated roles
Those functions where the state interacts with the market due to the will of the people/ political demands.
Causes of market failure
externalities, imperfect information, monopolies.
Externalities
Pollution and long term health
Imperfect information
Variable interest rate mortgages and mortgage backed - securities.
Monopolies
competition removed, so key efficiency is gone. can occur naturally.
Keyneianism
The state could and should be more involved in economic crises and fiscal policy to minimize boom and bust cycles. Gov’t should engage in deficit spending (borrowing and spending more than revenue) in order to increase demand. Debt could be paid off once economy improves and inflation by decreasing demand.
Stagflation
A problem for Keynes in that high inflation and high unemployment can’t really be corrected by more gov’t spending and borrowing…it makes the situation worse by increasing inflation.
monetarism
Milton Friedman; only monetary policy can affect economic well-being in capitalism. Gov’t should be LESS involved in the economy. Gov’t should spend less and be concerned with the amount of money printed and circulated (monetary policy).
Comparative Advantage
Maximum benefit if all produce what they do best and trade with others doing the same
Structural adjustment programs
World Bank and IMF programs (loans) that require neoliberal reforms such as privatizing industry, reduced deficits, less gov’t spending, and free trade
Globalism
has changed the role of the state in the economy. International influence and private capital alter gov’t capacity and influence.
Vertical Accountability
Between the Government and the peopl
Horizontal Accountability
Between the branches of Government
Majoritarian democracy
power concentrated in a single party, executive which dominates the legislature. Often single legislative branch, constitution easily amended.
consensus democracy
Multiparty executive in a coalition government, executive-legislative balance, bicameral legislatures with roughly equal power, rigid constitutions which are not easily amended
Coalition Government
parliamentary practice requiring at least 2 parties to negotiate to rule.
Veto Player
Parties with veto power over policies and laws; SHOULD make government more horizontally accountable
Head of state
Official, symbolic rep. of a state; speaks on behalf of the country; primary actor in world affairs; often king or president