1. the central means by which people can achieve individual freedom

2. central means by which people can achieve collective equality

interactions between the forces of supply and demand & the allocation of resources through that interaction

*the medium through which goods and services are exchanged*

those goods, provided or secured by the state, available for society and indivisible (cannot be owned by any one individual or group)

ie: national defense, roads

goods inherently linked to individual freedom

the state's provision of public benefits, provided by state to those who are in adverse circumstances

ie: education

healthcare

transportation

or "welfare"

1. greedy state takes hard-earned revenues of its citizen

2. a critical tool for generating a basic level of collective equality

simply a medium of exchange

-an instrument through which people conduct economic transactions

institution that controls how much money is flowing through economy & how much it costs to borrow money in that economy

 -controls interest rates

*U.S. Federal Reserve = U.S. central bank

if central bank ↓ interest rates charged to banks

(5 steps)

-banks ↓ their interest rates for business&ppl

-loans become cheaper, saving less lucrative

-causes people to borrow & spend more

=

-increase in amount of $ in economy

STIMULATING economic growth

if central bank ↑ interest rates to banks

(5 steps)

-banks ↑ interest rates

-loans become more expensive, saving is important

-people borrow less & save more

-decrease of money supply in economy

=

SLOWING economic growth 

too much money chasing after too few goods

-prices begin to rise and money loses its value

-inflation that is more than 50% a month for more than two moths in a row

-occurs when govt lacks tax revenues needed to carry out basic tasks

regulations

(indirect/specific)

rules or orders that set boundaries of a given procedure

-indirect; safety or environmental regulations affecting how business is run

-specific; area of competition and innovation

a single producer of a good or service that is able to dominate the market

-can control prices by limiting supplies

a group of producers that, individually are unable to dominate a market, but in collaboration with one another can.

-can control prices by limiting supplies

OPEC

Organization of Petroleum Exporting Countries

tariffs

quotas

non-tariff barriers

limit imports through methods other than taxation

ie: health & safety regulation

1. generate state revenue

2. foster local industry

3. protect local jobs

4. keep wealth in the country

1. promote competition

2. keep the costs of goods low

3. stimulate domestic innovation--> comparative advantage

states regulate & protect _____ & _____

to prevent _____&_____

regulate & protect markets & property

to prevent monopoly or cartels

the actual relationship between political and economic institutions in a particular country

as well as

the policies and outcomes they create

liberalism

social democracy

communism

mercantilism

the economy should be "allowed to do" what it wishes

-state should only intervene to defend public when crises arises

(old material)

liberalism as political ideology

-high priority on individual political & economic freedom

-limit state power for greater individual & market freedoms

Liberalism as political-economic system

(6 characteristics)

-weak state

-laissez faire

-little regulation to encourage competition & innovation--> capitalism

-free market 

-social expenditures dramatically restricted

-property rights expanded & protected

Liberalism

as political-economic system

emphasis on individual freedoms over collective equality & on power of markets over state

-state involvement in economy & society is relatively low

examples of liberalism

political-economic system

USA

U.K

Canada

Australia

New Zealand

Social Democracy

as political-economic system

-balance of individual freedom& collective equality

-state is seen less as threat and more as creator of positive social rights& foundation of collectiv equality

-trade & competition under state management

system of policy making involving the state, labor and businesses building consensus over competition

-common in social democratic systems

examples of Social Democracy

as political economic system

France

Germany

Sweden

Denmark

Purchasing Power Parity

attempts to estimate buying power of income in each country by comparing similar costs using prices in the US as a benchmark