1
Q
Define:
political economy
A
It is the study of how political forces influence economic policies and outcomes, and how economic interests shape political institutions and decisions.
Political economy bridges economics and political science to understand power and resource distribution.
2
Q
True or False:
Political economy only focuses on government budgets and taxation.
A
False
It also explores trade, development, inequality, and global financial systems.
It includes both domestic and international interactions between politics and economics.
3
Q
Why is political economy important for understanding global development?
A
Because it reveals how policies, power structures, and economic models affect inequality, growth, and access to resources.
It links policy decisions to social and economic outcomes in both rich and poor countries.
4
Q
How does political economy differ from traditional economics?
A
It incorporates power relations, political institutions, and historical context, unlike traditional economics which often assumes rational markets and actors.
Political economy often questions the neutrality of economic laws.
5
Q
Fill in the blanks:
The government uses ______ ______ and ______ ______ to redistribute income and reduce inequality.
A
welfare programs; progressive taxation
Redistribution promotes social equity and economic stability.
6
Q
Which are tools used to stabilize the economy?
A
monetary policy and fiscal policy
These tools influence inflation, employment, and overall economic output.
7
Q
Explain the difference between fiscal and monetary policy.
A
- Fiscal policy uses strategies that address government spending and taxation and is controlled by the government.
- Monetary policy is the approach to handle money supply in an economy by the central bank.
Fiscal policy is set by the government (e.g., Congress or Parliament), while monetary policy is managed by the central bank to influence inflation, employment, and economic growth.
8
Q
Describe two ways the government promotes long-term economic growth.
A
By funding research and development and by implementing trade policies that encourage innovation and exports.
These measures enhance productivity and competitiveness.
9
Q
Define:
Economic system
A
Structure by which a society allocates resources and distributes goods and services.
Examples include capitalism, socialism, and mixed economies.
10
Q
Name three core concerns of political economy.
A
- Distribution of wealth
- Role of the state
- Impact of institutions on economic performance
These areas influence both domestic policy and international relations.
11
Q
What is one way government policies can affect economic inequality?
A
Tax policies can either redistribute wealth or reinforce existing disparities.
Progressive taxation tends to reduce inequality; regressive taxes may increase it.
12
Q
What’s the difference between political economy and international political economy (IPE)?
A
Political economy can focus on national or local levels, while IPE examines global interactions like trade, finance, and development.
IPE is a subfield that addresses cross-border dynamics.
13
Q
True or False:
Political economy does not consider historical or institutional factors.
A
False
Institutions like central banks or trade blocs play key roles in shaping outcomes.
14
Q
What is economic liberalism?
A
It’s the belief that free markets and limited government intervention lead to economic growth and individual freedom.
Associated with thinkers like Adam Smith and David Ricardo.
15
Q
What best describes Marxism in political economy?
A
Focus on class struggle and capitalism’s contradictions
Marxism sees capitalism as inherently exploitative and prone to crisis.
16
Q
True or False:
Liberalism assumes that states act in their own economic interest and should regulate markets heavily.
A
False
Liberalism prefers minimal state interference in the economy.
It advocates for market efficiency and free competition.
17
Q
Why do Marxist theorists emphasize the role of class in economic systems?
A
Because they argue that class conflict drives historical and economic change.
Workers (proletariat) and owners (bourgeoisie) have conflicting interests.
18
Q
Define:
Mercantilism
A
A theory that views economic strength as essential to national power, favoring trade surpluses and state intervention.
Dominant in early modern Europe, it prioritizes national interest over global markets.
19
Q
Fill in the blank:
According to Marxism, capitalism leads to exploitation and should be replaced by ______.
A
socialism
Marx proposed a classless society where the means of production are communally owned.
20
Q
What is one key differece between mercantilism and liberalism?
A
Mercantilism supports strong state control, while liberalism favors minimal interference.
Liberalism focuses on market freedom; mercantilism on state-driven accumulation.
21
Q
How did classical liberalism influence modern capitalism?
A
It laid the foundation for free markets, private property, and individual enterprise.
Core ideas include supply and demand, and limited government.
22
Q
What is structuralism in political economy?
A
A theory emphasizing historical structures and global inequality, especially between rich and poor countries.
Often linked to dependency theory and critiques of global capitalism.
23
Q
True or False:
Structuralism argues that developing countries benefit equally from global trade.
A
False
Global economic structures favor industrialized nations.
It suggests they are structurally disadvantaged.
24
Q
Define:
Institutionalism
A
A theory that highlights the role of political and economic institutions in shaping behavior and outcomes.
Institutions like laws, norms, and organizations shape markets and policies.
25
Why do institutional economists study **property rights**?
Because well-defined rights encourage **investment and economic development**.
## Footnote
Secure property rights reduce uncertainty in economic exchanges.
26
How does new **institutionalism** differ from classical liberalism?
It acknowledges market failures and sees **institutions as necessary for market efficiency**.
## Footnote
Institutions reduce transaction costs and ensure rule enforcement.
27
# Define:
dependency theory
It argues that **underdevelopment** in poor countries results from their **dependence on wealthy nations**.
## Footnote
A core idea in Latin American structuralism during the 1960s–70s.
28
# True or False:
**Developing countries** typically have lower income levels, limited industrialization, and greater dependence on agriculture.
True
## Footnote
These countries often face **challenges** related to infrastructure, education, and access to healthcare.
29
# Fill in the blanks:
\_\_\_\_\_\_ \_\_\_\_\_\_ are characterized by high levels of income, advanced technological infrastructure, and a strong service sector.
Developed countries
## Footnote
In developed economies, services like finance, education, and healthcare contribute significantly to **GDP**.
30
Name two features of **world-systems theory**.
Division into core, periphery, and semi-periphery; focus on **global economic hierarchy**.
## Footnote
Developed by Immanuel Wallerstein, it builds on dependency theory.
31
# True or False:
According to **dependency theory**, integration into **global trade** always leads to development.
False
## Footnote
The terms of trade tend to favor industrialized nations. It often leads to continued dependence and inequality.
32
# Fill in the blank:
**Public choice theory** treats politicians as \_\_\_\_\_\_-\_\_\_\_\_\_ actors, similar to firms or consumers.
self-interested
## Footnote
This view explains **lobbying**, rent-seeking, and bureaucratic inefficiency.
33
# Fill in the blanks:
\_\_\_\_\_\_ \_\_\_\_\_\_ is the theory introduced in the early to mid-20th century advocating for **government intervention** in the economy during downturns.
Keynesian economics
## Footnote
Developed by John Maynard Keynes, this theory became influential during the **Great Depression**.
34
How does feminist political economy **differ** from traditional approaches?
It emphasizes **gender relations, unpaid labor, and social reproduction** in economic analysis.
## Footnote
It critiques the invisibility of women’s roles in standard models.
35
What is the main contribution of **ecological political economy**?
It integrates **environmental limits** into political and economic analysis.
## Footnote
It critiques growth-based models and promotes sustainability.
36
# Define:
Market
A system where buyers and sellers interact to **exchange goods and services**.
## Footnote
Markets can be local, national, or global, and formal or informal.
37
# True or False:
Markets are always **free of government** influence.
False
## Footnote
Regulation helps correct market failures or protect public interest. Most markets are influenced or regulated by the state.
38
What are the four types of **market structures**?
1. Perfect Competition
2. Monopoly
3. Oligopoly
4. Monopolistic Competition
## Footnote
Each market structure differs in the number of firms, level of competition, product differentiation, and barriers to entry.
39
# Fill in the blanks:
A \_\_\_\_\_\_ \_\_\_\_\_\_ has many buyers and sellers, none of whom can control the price.
competitive market
## Footnote
Perfect competition is a theoretical model; **real-world markets vary**.
40
Describe the **characteristics** of an **oligopoly**.
Few sellers, similar or differentiated products, and high barriers to entry.
## Footnote
Oligopolies may lead to **collusion or strategic pricing behavio**r.
41
# Fill in the blank:
A \_\_\_\_\_\_ \_\_\_\_\_\_ has **one seller**, a **unique product**, and high barriers to entry.
monopoly market
## Footnote
Monopolies can lead to higher prices and limited consumer choice.
42
Identify two potential **drawbacks** of a **monopoly**.
Higher prices and reduced consumer choice.
## Footnote
Lack of competition in monopolies may lead to inefficiency.
43
Why are **monopolies** considered problematic in political economy?
Because they **concentrate economic power** and reduce **consumer choice**.
## Footnote
Monopolies may result in higher prices and less innovation.
44
# True or False:
In an **oligopoly**, firms are unlikely to consider the actions of competitors when **setting prices**.
False
## Footnote
**Strategic interdependence** is a defining feature of oligopolies.
45
# Fill in the blanks:
In **monopolistic competition**, firms compete based on \_\_\_\_\_\_ \_\_\_\_\_\_ rather than price alone.
product differentiation
## Footnote
**Marketing and branding play** a major role in this structure.
46
What is a **key difference** between monopolistic competition and perfect competition?
Monopolistic competition has **product differentiation**; perfect competition does not.
## Footnote
Product differentiation gives firms some price-setting power in monopolistic competition.
47
# Define:
externalities
Costs or benefits of an economic activity **not reflected in market prices**.
## Footnote
**Pollution** is a common negative externality.
48
How does a market economy **differ** from a command economy?
In a market economy, **decisions are made by individuals**; in a command economy, by **the state**.
## Footnote
Most economies today are **mixed systems**.
49
What is **market failure**?
A situation where markets do not **allocate resources** efficiently or equitably.
## Footnote
Causes include externalities, monopolies, and information asymmetry.
50
What role does the state play in **correcting market failures**?
It can **regulate**, tax, subsidize, or provide public goods.
## Footnote
Examples include emissions limits, health care, and education.
51
**Public goods** are efficiently provided by **markets**.
False
## Footnote
Public goods are **non-excludable** and **non-rivalrous** (e.g., national defense) and are provided by government.
52
What is the **free-rider problem**?
When individuals **benefit from a good or service without contributing to its cost**, leading to under-provision of that good.
## Footnote
The free-rider problem often occurs with public goods like clean air or national defense, where it's difficult to exclude non-payers.
53
# Define:
Privatization
The transfer of ownership from the public to the **private sector**.
## Footnote
Advocates argue for **efficiency**; critics worry about equity and access.
54
# Fill in the blank:
**Governments** may use \_\_\_\_\_\_ to influence markets and promote public goals.
regulation
## Footnote
Regulation can **target prices**, wages, safety, or environmental impact.
55
What is **market liberalization**?
The **removal of state controls** to allow more free-market forces.
## Footnote
Common in structural adjustment programs in developing countries.
56
# Define:
Price control
A **government-imposed** limit on how high or low a price can go.
## Footnote
Examples include rent control and minimum wage laws.
57
How do **subsidies** affect **market behavior**?
They **reduce prices for consumers** or increase returns for producers.
## Footnote
Used to support essential sectors or promote equity.
58
How do subsidies **differ** from tariffs?
**Subsidies** support domestic production; **tariffs** protect it by taxing imports.
## Footnote
Both are tools of economic policy with political implications.
59
# True or False:
Political actors can influence **market outcomes** through policy decisions.
True
## Footnote
Policy choices shape taxes, regulation, and investment environments. Markets operate within institutional and **political frameworks**.
60
# Define:
Rent-seeking
When individuals or groups try to gain **economic advantage through political influence**, not productivity.
## Footnote
Common in heavily regulated economies.
61
# Fill in the blank:
In many developing countries, **informal markets** provide \_\_\_\_\_\_ and \_\_\_\_\_\_ when formal systems fail.
employment; access to goods
## Footnote
Informal economies may lack regulation but play **vital social roles**.
62
What is **market integration**?
The process of **connecting separate markets** into larger regional or global markets.
## Footnote
Integration often increases efficiency, but can deepen inequalities.
63
# True or False:
**Market integration** always benefits all countries equally.
False
## Footnote
Marginalized economies may face competition without protection. Some countries benefit more, depending on their **economic position**.
64
What factors limit the **reach of markets** in some countries?
Poor infrastructure, weak institutions, and **political instability**.
## Footnote
State capacity affects how well markets function.
65
# Define:
Economic nationalism
A belief that **national interest** should guide economic decisions, often opposing free trade.
## Footnote
It can lead to protectionism and anti-globalization policies.
66
What is **globalization** in political economy?
The increasing interconnectedness of economies through trade, investment, finance, and information.
## Footnote
Globalization affects national sovereignty, labor markets, and inequality.
67
# True or False:
**Globalization** only benefits **wealthy countries**.
False
## Footnote
Benefits depend on domestic policies and integration strategies. While uneven, globalization can offer growth opportunities to **developing nations**.
68
Describe three causes of globalization.
1. **Technological Advances**: Innovations in communication and transportation make international interaction easier and faster.
2. **Trade Liberalization**: Reduction of tariffs and trade barriers encourages global trade.
3. **Foreign Direct Investment (FDI)**: Companies invest in operations abroad, linking economies together.
## Footnote
Globalization is driven by both policy choices and technological changes, which together create interdependent global markets and cultures.
69
# Define:
International trade
The exchange of goods and services across **national borders**.
## Footnote
Trade allows countries to access products they don’t produce and expand economic opportunities.
70
# Define:
Economic sanctions
**Penalties** imposed by one or more countries to influence another state’s behavior.
## Footnote
They may include **trade bans, asset freezes, or travel restrictions**.
71
How do trade liberalization and protectionism **differ**?
Liberalization removes **barriers**; protectionism imposes them to shield domestic industries.
## Footnote
Both reflect political choices with economic consequences.
72
# True or False:
**Trade liberalization** has made international trade more restricted.
False
## Footnote
It removes **tariffs and quotas**, making trade flows more open and competitive.
73
# True or False:
**Bilateral trade** agreements involve more than two countries.
False
## Footnote
Bilateral agreements are between two countries. Multilateral agreements involve multiple states, like the CPTPP.
74
What is **foreign direct investment** (FDI)?
**Long-term investment** by a company in a **foreign country**, often via ownership or control.
## Footnote
FDI promotes technology transfer but may also create dependency.
75
What is the **North-South** divide in **political economy**?
The **socio-economic gap** between developed (Global North) and developing (Global South) nations.
## Footnote
Reflects historical inequalities and patterns of dependency.
76
How do conditional loans **differ** from unconditional aid?
Conditional loans require **policy changes**; unconditional aid does not.
## Footnote
Conditionality can limit national policy autonomy.
77
What is **sovereign debt**?
**Money borrowed** by a government from domestic or international lenders.
## Footnote
High debt levels can lead to crises and restructuring.
78
# Define
Inflation
The general increase in prices over time, reducing **purchasing power**.
## Footnote
Inflation is typically measured by indexes like the Consumer Price Index (CPI).
79
Name two **indicators** commonly used to track **inflation**.
Consumer Price Index (CPI) and GDP deflator
## Footnote
CPI tracks consumer goods prices; the GDP deflator adjusts GDP for price changes across all goods and services.
80
# True or False:
Economic development is only measured by **Gross domestic product (GDP) growth**.
False
## Footnote
The Human Development Index (HDI) is a broader measure. It also includes health, education, and quality of life indicators.
81
What is the **Human Development Index (HDI)**?
A composite index that measures a **country's achievements in health, education, and income**.
## Footnote
HDI helps assess overall well-being beyond GDP.
82
What is the **difference** between nominal GDP and real GDP?
Nominal GDP is **unadjusted** for inflation; real GDP is **inflation-adjusted**.
## Footnote
Real GDP provides a clearer picture of actual growth over time.
83
# Fill in the blanks:
The **Sustainable Development Goals (SDGs)** were adopted by the \_\_\_\_\_\_ \_\_\_\_\_\_ in 2015.
United Nations
## Footnote
The SDGs include targets on **poverty, gender equality, and climate action**.
84
What are **trade blocs**?
**Groups of countries** that promote trade by **reducing barriers** among members.
## Footnote
Examples include the EU, MERCOSUR, and ASEAN.
85
How does **economic interdependence affect global politics**?
It can reduce **conflict risk** but also create vulnerabilities to external shocks.
## Footnote
Interdependence does not guarantee cooperation.
86
Why might a country use **tariffs despite promoting free trade**?
To protect strategic industries or respond to **unfair trade practices**.
## Footnote
Tariffs are often politically motivated.
87
What is the **global value chain (GVC)**?
The full range of activities and networks involved in **producing a product across multiple countries**.
## Footnote
GVCs increase efficiency but expose economies to global disruptions.
88
Why are **global value chains** important in **international trade**?
They let firms reduce costs and access **specialized inputs**.
## Footnote
For example, a smartphone may be designed in one country, assembled in another, and contain parts from several others.
89
Why do countries benefit from **specializing** based on **comparative advantage**?
Because they can produce goods more efficiently and trade for others, **maximizing overall output**.
## Footnote
Comparative advantage drives gains from trade even if one country is more efficient in everything.
90
What is **structural adjustment**?
**Economic reforms** imposed by institutions like the **IMF or World Bank** in exchange for loans.
## Footnote
Often involve liberalization, privatization, and reduced public spending.
91
# Fill in the blanks:
The \_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_ promotes **global trade** by reducing tariffs and resolving disputes.
World Trade Organization
| (WTO)
## Footnote
Established in 1995, the WTO replaced the **General Agreement on Tariffs and Trade (GATT)**.
92
What are common **critiques** of the **WTO**?
It favors **powerful states**, lacks transparency, and can limit national policy space.
## Footnote
Critics also cite environmental and labor concerns.
93
What is the main function of the **World Trade Organization (WTO)**?
To oversee **global trade rules**, promote trade liberalization, and resolve disputes between member states.
## Footnote
The WTO helps enforce international trade agreements and prevent protectionism.
94
# Fill in the blank:
The \_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_ provides **emergency financial support** to countries facing balance of payments crises.
International Monetary Fund
| (IMF)
## Footnote
The IMF also monitors the global economy and offers policy advice.
95
What roles does the **IMF** play in global **economic governance**?
It provides **financial assistance**, monitors economies, and promotes monetary cooperation.
## Footnote
IMF policies are often controversial due to austerity conditions.
96
# Fill in the blank:
The **World Bank** focuses on ____ through loans and projects in **developing countries**.
poverty reduction and development
## Footnote
It funds infrastructure, education, and health initiatives.
97
# True or False:
The World Bank provides **loans** primarily to **high-income countries**.
False
## Footnote
Its goal is to reduce poverty and support development projects. It focuses on **developing countries**.
98
Why might a country seek **help from the IMF**?
To stabilize its economy during **financial crises** or currency imbalances.
## Footnote
IMF assistance often comes with conditions (structural reforms).
99
What is the role of **United Nations Conference on Trade and Development (UNCTAD)** in the global economy?
To support the i**ntegration of developing countries** into world trade and development processes.
## Footnote
It offers research, policy analysis, and technical assistance.
100
How does the **Organisation for Economic Co-operation and Development (OECD)** influence global economic policy?
By offering a forum for **policy dialogue**, research, and coordination among advanced economies.
## Footnote
The OECD promotes transparency, good governance, and inclusive growth.
101
How do the **WTO** and **regional trade agreements (RTAs)** differ?
The **WTO** sets global rules; **RTAs (like the EU or ASEAN)** offer preferential trade among specific members.
## Footnote
RTAs may complement or complicate WTO efforts.
102
What is a **multinational corporation (MNC)**?
A company that operates in **multiple countries** through investment, production, or trade.
## Footnote
MNCs shape global value chains and influence labor and tax policies.
103
# Fill in the blank:
The **World Bank Group** includes the International Bank for Reconstruction and Development (IBRD) and the \_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_.
International Development Association
| (IDA)
## Footnote
The IDA provides **low-interest loans and grants** to the poorest countries.
104
# True or False:
**UNCTAD** and the **WTO** share the same mandate and authority.
False
## Footnote
UNCTAD focuses on **development and analysis**; the WTO on **legal frameworks** and enforcement of trade rules.
105
# Fill in the blank:
\_\_\_\_\_\_ \_\_\_\_\_\_ establish rules and reduce trade barriers between countries.
Trade agreements
## Footnote
These can be bilateral (two countries), regional (e.g., MERCOSUR), or multilateral (e.g., WTO agreements).
106
How do fair trade and free trade **differ** in their goals?
Fair trade focuses on **ethical practices** and fair compensation; free trade emphasizes **minimal restrictions and efficiency**.
## Footnote
Fair trade often supports small producers; free trade may favor large-scale efficiency.
107
What is a **trade war**?
A situation where countries impose **tariffs and barriers** in retaliation, escalating tensions.
## Footnote
Recent examples include the U.S.–China trade tensions under the Trump administration.
108
Name two **potential negative effects** of **globalization** through trade.
1. Job losses in import-competing sectors
2. Environmental degradation
## Footnote
Critics also raise concerns about **labor exploitation and cultural erosion**.
109
What are **imports**?
Goods and services purchased from **abroad**
## Footnote
High **import levels can indicate strong demand** but may lead to trade imbalances.
110
# Fill in the blank:
A country with more **imports than exports** has a \_\_\_\_\_\_ \_\_\_\_\_\_.
trade deficit
## Footnote
Persistent deficits can affect **currency value** and raise political concerns.
111
# True or False:
A **trade surplus** occurs when a country imports more than it exports.
False
## Footnote
A trade surplus means exports exceed imports; the opposite is a trade deficit.
112
Why do **trade surpluses** and **deficits sometimes** cause political tension?
They may lead to accusations of **unfair trade practices** or currency manipulation.
## Footnote
For example, countries may blame trade imbalances for domestic job losses or industry decline.
113
# True or False:
An **appreciating domestic currency** can reduce export competitiveness.
True
## Footnote
A stronger currency makes **domestic goods more expensive for foreign buyers**.
114
# Fill in the blank:
A nation's \_\_\_\_\_\_ \_\_\_\_\_\_ shows the difference between its total **exports and imports**.
trade balance
## Footnote
A positive balance (surplus) adds to GDP; a negative one (deficit) subtracts from it.
115
What is an **exchange rate**?
The value of one **currency** expressed in terms of another.
## Footnote
For example, 1 USD = 4,000 COP means one U.S. dollar is worth four thousand Colombian pesos.
116
Which of the following is not a common type of exchange **rate regime**?
* Floating
* Pegged (fixed)
* Rotational
* Managed float
Rotational
## Footnote
Exchange rate regimes vary based on how much governments intervene in currency markets.
117
# Fill in the blank:
The \_\_\_\_\_\_ \_\_ \_\_\_\_\_\_ records a **country's transactions** with the rest of the world.
balance of payments
## Footnote
It includes **trade, investment, and financial flows** in and out of a country.
118
# True or False:
The **current account** includes foreign investments and government loans.
False
## Footnote
Those are part of the **capital account**; the current account focuses on trade in goods, services, and income.
119
What factors influence **foreign exchange markets**?
Economic fundamentals, interest rates, and market sentiment.
## Footnote
**Expectations and speculation** can cause rapid changes in currency values.
120
Why might a **currency crisis** occur?
Due to **economic imbalances**, lack of investor confidence, or speculative attacks on a currency.
## Footnote
Crises can lead to inflation, capital flight, and recession.
121
What are **international reserves**?
**Assets held by central banks** to manage exchange rates and provide financial stability.
## Footnote
These often include foreign currencies, gold, and IMF-issued Special Drawing Rights (SDRs).
122
# Fill in the blank:
\_\_\_\_\_\_ \_\_\_\_\_\_ refers to **money borrowed** by governments from foreign lenders.
Sovereign debt
## Footnote
Excessive sovereign debt can trigger **default or a financial crisis**.
123
How do capital controls **differ** from free capital mobility?
Capital controls **restrict** capital movement; free mobility **allows** unrestricted inflows and outflows.
## Footnote
Controls can protect economies from **volatility**, but may limit **investment and growth**.
124
Name two components of the **balance of payments.**
1. Current account
2. Capital and financial account
## Footnote
These accounts track all international transactions a country makes.
Political Science 101
flashcards
Decks in class (11)
# Cards
-
Introduction to Political Science125
-
Political Ideologies and Theories72
-
The State, Nation, and Government89
-
Democracy and Political Participation77
-
Political Institutions and Governance75
-
Comparative Politics70
-
International Relations and Global Politics105
-
Political Economy124
-
Public Policy and Administration80
-
Political Behavior and Public Opinion51
-
Contemporary Political Issues and Challenges75
