Chapter 4 Review

Question 1

The study of the interaction between states and markets

Answer 1

political economy

Question 2

The interaction between the forces of supply and demand that allocates resources

Answer 2

market

Question 3

Goods or services that are owned by an individual or group, privately or publicly

Answer 3

property

Question 4

Goods, provided or secured by the state, available to society and which no private person or organization can own

Answer 4

public goods

Question 5

State provision of public benefits, such as education, health care, and transportation

Answer 5

social expenditures

Question 6

The total market value of all goods and services produced by a country over a period of one year

Answer 6

gross domestic product (GDP)

Question 7

The state institution that controls how much money is flowing through the economy, as well as how much it costs to borrow money in that economy

Answer 7

central bank

Question 8

An outstripping of supply by demand, resulting in an increase in the general price level of goods and services and the resulting loss of value in a country’s currency

Answer 8

inflation

Question 9

Inflation of more than 50 percent a month for more than two months in a row

Answer 9

hyperinflation

Question 10

A period of falling prices and values for goods, services, investments, and wages

Answer 10

deflation

Question 11

A rule or order that sets the boundaries of a given procedure

Answer 11

regulation

Question 12

A single producer that is able to dominate the market for a good or service without effective competition

Answer 12

monopoly

Question 13

A tax on imported goods

Answer 13

tariff

Question 14

A nontariff barrier that limits the quantity of a good that may be imported into a country

Answer 14

quota

Question 15

Policies and regulations used to limit imports through methods other than taxation

Answer 15

nontariff regulatory barriers

Question 16

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

Answer 16

comparative advantage

Question 17

The relationship between political and economic institutions in a particular country and the policies and outcomes they create

Answer 17

political-economic system

Question 18

The principle that the economy should be ““allowed to do”” what it wishes; a liberal system of minimal state interference in the economy

Answer 18

laissez-faire

Question 19

A system of production based on private property and free markets

Answer 19

capitalism

Question 20

A system of social democratic policy making in which a limited number of organizations representing business and labor work with the state to set economic policy

Answer 20

neocorporatism

Question 21

A political-economic system in which national economic power is paramount and the domestic economy is viewed as an instrument that exists primarily to serve the needs of the state

Answer 21

mercantilism

Question 22

Industry partially owned by the state

Answer 22

parastatal

Question 23

A statistical tool that attempts to estimate the buying power of income across different countries by using prices in the United States as a benchmark

Answer 23

purchasing-power parity (PPP)

Question 24

A statistical formula that measures the amount of inequality in a society; its scale ranges from 0 to 100, where 0 corresponds to perfect equality and 100 to perfect inequality

Answer 24

Gini index

Question 25

A statistical tool that attempts to evaluate the overall wealth, health, and knowledge of a country’s people

Answer 25

Human Development Index (HDI)

Question 26

Changes consistent with liberalism that aim to limit the power of the state and increase the power of the market and private property in an economy

Answer 26

economic liberalization