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Political Economy

the branch of social science that deals with the production and distribution and consumption of goods and services and their management

Rational Choice Theory

A popular theory in political science to explain the actions of voters as well as politicians. It assumes that individuals act in their own best interest, carefully weighing the costs and benefits of possible alternatives.

Unemployment

the state of being unemployed or not having a job

Inflation

a general and progressive increase in prices

Supply and Demand

an economic concept that states that the price of a good rises and falls depending on how many people want it (demand) and depending on how much of the good is available (supply)

Recession

the state of the economy declines

Economic Growth

steady growth in the productive capacity of the economy (and so a growth of national income)

Income Distribution

the way all the income earned in a country is divided among different groups of income earners

Progressive Taxes

A tax rate that increases as the amount of ones income increases

Flat Tax

proportional tax on individual income after a specified threshold has been reached

Tax Credit

a credit used in order to lower taxes

Loophole

an ambiguity (especially one in the text of a law or contract) that makes it possible to evade a difficulty or obligation

Maynard Keynes

Promoted the New Deal; The government should provide programs to promote the economy

National Debt

the debt of the national government (as distinguished from the debts of individuals and businesses and political subdivisions)

Demand-Side Economics

the idea that government spending and tax cuts help an economy by raising demand

Trickle-Down Economics

economic theory that holds that money lent to banks and businesses will trickle down to consumers

Central Bank

a government monetary authority that issues currency and regulates the supply of credit and holds the reserves of other banks and sells new issues of securities for the government

Regulatory Policy

policy that results in government control over individuals and businesses. Examples include protection of the environment and consumer protection

Command Economy

An economic system in which the government controls a country's economy.

Capitalism

an economic system based on private ownership of capital

Underemployment

the condition when people work at jobs for which they are overqualified or that do not utilize their skills

Buying Power

the quantity of goods and services a person can buy with a given amount of money

Excess Demand

when quantity demanded is more than quantity supplied

Depression

a long-term economic state characterized by unemployment and low prices and low levels of trade and investment

Gross Domestic Product (GDP)

The total output of all economic activity in the nation, including goods and services.

Fiscal Policy

a government policy for dealing with the budget (especially with taxation and borrowing)

Regressive Taxes

taxes levied on all taxpayers, regardless of income or ability to pay, they tend to place proportionally more of a burden on those with lower incomes.

User Fee

charges levied for the use of a good or service - such as paying to visit a national park

Earned Income Tax Credit

a "negative income tax" that provides income to very poor individuals in lieu of charging them federal income taxes

Effective Tax Rate

The actual percentage of a person's income spent to pay taxes

Deficit Spending

government practice of spending more than it takes in from taxes

Government Bond

a bond that is an IOU on the United States Treasury

Supply-Side Economics

a school of economics that believes tax cuts can help an economy by raising supply

Monetary Policy

The management of the money supply and interest rates

Federal Reserve Bank (The Fed)

The central bank of the United States.

Codetermination

As related to international labor relations, a practice in which employees have a role in the management of a company that includes worker representatives with voting rights on the corporate board of directors.

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