Government and Economy Terms Review

What is a Chief of State?

Chief of state the leader of the country who represents the state at official and ceremonial functions, but

who is not generally involved with the day-to-day activities of the

government.

What is a Head of Government?

Head of government the top executive leader who is in charge of the day-to-day

activities of the government. He does the work of governing.

What is a Constitutional Monarchy?

Constitutional Monarchy - a political system in which the head of

state is a king or queen whose power is limited by a constitution, the degree of power the monarch

has depends on what the constitution says.

What is a Communist State?

Communist State – any system of government in which a single party holds power and the state controls the economy.

Most communist states have moved toward market

economies.

What is an autocracy?

Autocratic - government in which one person possesses

unlimited power and the citizen has little if any role in the

government. Role is to obey.

What is an oligarchy?

Oligarchic - government by the few, a small group of people

have the power and the citizen has little if any role in the

government. Role is to obey.

What is a democracy?

Democratic - a government in which the people have the

power which they use directly or indirectly by holding elections

for government officials to represent them (the people) and make decisions about governing.

Role is to vote.

What is a Presidential Democracy?

Presidential - a system of government in which the president and the legislators

are separately and directly elected by the citizens. The president and the cabinet

members cannot remain in the legislature. (3 Separate Branches: Legislative, Judicial, Executive)

What is a Parliamentary Democracy?

Parliamentary – system in which the citizens vote for the legislators, who then

select the Prime Minister. The Prime Minister and his cabinet remain in the legislature, but also hold the executive power. (2 Branches: Legislative and

Executive – Prime Minister and Cabinet are members of both branches)

What is a unitary way of distributing power?

Unitary - a form of government in which power is held by ONE

central authority (national government) – regional

authorities (states, provinces) have no real power

What is a confederal way of distributing power?

Confederation - voluntary associations of independent countries that agree to join

together to achieve a goal but don’t give up any power over

their own nation (organizations: OPEC, UN, EU)

What is a federal way of distributing power?

Federal - a form of government in which power is divided between one central and several regional authorities (government: republic, democracy). Generally, national security and defense, monetary policy,

and other issues of a "national" scope are handled at the "federal" level (central

authority) while more local issues such as road and infrastructure maintenance and

education policy are handled at the regional level.

What is a command economy?

Command Economy: In a command economy, the central authority

(government) is in charge and makes all economic decisions. The most important aspect of this type of economy is that all major decisions related to the production,

distribution, commodity and service prices, are all made by the government or

central authority.

What is a Market Economy?

Market Economy: In a market economy, consumers are in charge and make

economic decisions by spending money on goods and services they need/want. In

a market economy, national and state governments play a minor role.

Consumers and their buying decisions drive the economy. The assumptions of the market play a major role in deciding the right path for a country’s economic

development.

What is a traditional economy?

Traditional Economy: In a traditional economy, things are done as they have

been done in the past (traditionally). The economic system in which resources are allocated by inheritance, and which has a

strong social network and is based on primitive methods and tools. It is strongly

connected to subsistence farming.

What is a mixed economy?

What is a mixed economy? A mixed economy blends components of two or more of the following economic systems to varying degrees: traditional, market, and

command. Most countries have a Mixed Economy. However, a Mixed Economy is not an economic

system but rather a blending of two different types of systems.

What is specialization?

Specialization - Specialization occurs when one nation can produce a good or service at a lower opportunity cost than

another nation. Specialization encourages trade and can be a positive

factor in a country’s economy. For example, if a country specializes in oil,

they can trade oil for a certain food that another country specializes in so that

both countries benefit. “Do what you do best; trade for the rest.”

What is a tariff?

Tariff – A tariff is a tax placed on goods that one nation

imports from another. Many nations use tariffs to protect their industries from foreign competition. Tariffs provide

protection by acting to raise the price of imported goods.

What is a quota?

Quota – A quota sets a limit on the amount of certain goods that can be imported into a country.

What is an embargo?

Embargo - An embargo is an order designed to stop the movement of

goods. No trading!!

What is a currency exchange rate?

Exchange Rates - exchange rates provide a procedure for determining the value of one

country’s currency in terms of another country’s currency. Without a system for exchanging

currencies, it would be very difficult to conduct international trade.

What is Gross Domestic Product?

Gross Domestic Product – The total value of all goods and services produced within a country in a year.

When countries increase capital/human capital, their GDP will

also increase.

What are the four factors that influence economic growth?

1. Natural Resources2. Human Capital3. Capital Goods4. Entrepreneurship

What are natural resources?

A material source of wealth (water, oil, gold, etc.)

What is human capital?

Human Capital – the value that humans bring to the production cycle including education and

training of workers whether formal or on-the-job

What are capital goods?

Capital Goods – Capital goods are the vast array of tools, equipment,

buildings, and vehicles used in production.

What is entrepreneurship?

Entrepreneurship – Entrepreneurship is the resource

that undertakes the risk of bringing the other resources together and

initiating the production process. An entrepreneur is a person who risks their own money to try to start a

business. When a country is open to entrepreneurship, that country’s

economy will grow faster.