14 terms

INB300 CHAPTER 2

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Political Economy
How the political, economic, and legal systems of a country are interdependent. They interact and influence each other, they affect the level of economic well-being in the nation.
Political System
The system of government in a nation. Assessed according to: the degree to which the country emphasizes collectivism as opposed to individualism, the degree to which the country is democratic or totalitarian
Totalitarianism
Form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties
Communist [Type of Totalitarianism]
Found in states where the communist party monopolizes power
Theocratic [Type of Totalitarianism]
Found in states where political power is monopolized by a party, group, or individual that governs according to religious principles
Tribal [Type of Totalitarianism]
Found in states where a political party that represents the interests of a particular tribe monopolizes power
Right-wing [Type of Totalitarianism]
Permits some individual economic freedom, but restricts individual political freedom
Market Economies
All productive activities are privately owned and production is determined by the interaction of supply and demand. Government encourages free and fair competition between private producers.
Command Economies
Government plans the goods and services that a country produces, the quantity that is produced, and the prices as which they are sold. All businesses are state-owned, and governments allocate resources for "the good of society". Because there is little incentive to control costs and be efficient, command economies tend to stagnate
Mixed Economies
Left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning. Governments tend to own firms that are considered important to national security
Legal Systems
- The rules that regulate behavior along with the processes by which the laws are enforced and through which redress for grievances is obtained

- The system in a country is influenced by the prevailing political system

- Legal systems are important for business because they
define how business transactions are executed identify the rights and obligations of parties involved in business transactions
Common Law [Type of Legal System]
Based on tradition, precedent, and custom
Civic Law [Type of Legal System]
Based on detailed set of laws organized into codes
Theocratic Law [Type of Legal System]
Law is based on religious teachings, such as Islamic law