Exam 5: Economic Policy of the State

Corruption is especially hard to fight in transitional political systems where norms of behavior are in flux.

Classic economic logic suggests that inflation and unemployment can BOTH be addressed effectively at the same time if government policies are wise and aggressive in their application.

What factors explain why it is more and more difficult for a country to control its own economic destiny?

Two things that governments can do to create greater equality are:

Import-substitution industrialization plans by governments often fail when large multilateral corporations target the country with massive shipments that flood the domestic market and drive local industries out of business.

Based on the data in your text, significant income inequalities are rather common in the selected sample societies and a surprisingly broad global pattern of income inequalities appears to exist regardless of type of political system.

The practice in underdeveloped countries of setting high tariffs to discourage imports and encourage the establishment of factories in their own states that could flourish without foreign competition is referred to as ______________ industrialization.

The dilemma of policy-making by government as it engages in the distribution of goods or services is to ultimately conclude that INEQUALITY is the option that creates the greater good in society.

Two factors that improve unemployment, inflation, and economic growth simultaneously are:

Some governments, like that in the South Korean example, are fortunate not to deal much with rent-seeking.

The pressure from rising wages in manufacturing spills over to wages for service workers and in turn raises the cost of services. This linkage is called ________________________.

Groups and others in society often cast themselves in the role of rent-seekers.

Baumol's disease focuses on the elasticity of the manufacturing sector as it creates prices for its end-use products.

What is the main argument for having central banks independent of the government's political leaders?

Your text argues that corruption has no direct economic costs but has many psychological costs including cynicism, lack of faith, and disregard for the rule of law.

One big reason that countries vary in their record of growth is that some governments make big mistakes in managing or investing in their economies.

Daily more than one trillion dollars move around the world.

The use of public resources for private gain is called _______________.

A central bank is set up to:

Why is corruption an important issue in the study and practice of politics?