CHAPTER 11 POLITICS AND THE ECONOMY TERMS AND PEOPLE TO KNOW

BARTER- The exchange of goods and services for other goods or services, without exchanging money.
CAPITALISM- An economic system where individuals own the means of production, based on competition the owners determine production and set prices, and the pursuit of profit is the reason for distributing goods and services.
CONSPICUOUS CONSUMPTION- Thorstein Veblen’s term for a change from the protestant ethic to an eagerness to show off wealth by the consumption of goods.
CONVERGENCE THEORY- The view that as capitalist and socialist economic systems each adopt features of the other, a hybrid for economic system will emerge.
CORPORATIONS- a company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.
CURRENCY- a system of money in general use in a particular country.
DEMOCRATIC SOCIALISM- A hybrid economic system in which the individual ownership of businesses is mixed with the state ownership of industries thought essential to the public welfare, such as the postal service and the delivery of medicine and utilities.
E-CASH- electronic financial transactions conducted in cyberspace via computer networks.
ECONOMY- A system of producing and distributing goods and services.

GOLD STANDARD- the system by which the value of a currency was defined in terms of gold, for which the currency could be exchanged. The gold standard was generally abandoned in the Depression of the 1930s.

GROSS DOMESTIC PRODUCT- the total value of goods produced and services provided in a country during one year.

INFLATION- a general increase in prices and fall in the purchasing value of money. LAISSEZ-FAIRE CAPITALISM- Unrestrained manufacture and trade (literally, “hands off” capitalism).

MARKET FORCES- The law of supply and demand.

MEDIUM OF EXCHANGE- An intermediary instrument used to facilitate the sale, purchase or trade of goods between parties. In modern economies the medium of exchange is currency.

MONOPOLY- Complete control of the entire supply of goods or of a service in a certain area or market.
SOCIALISM- An economic system characterized by the public ownership of the means of production, central planning, and the distribution of goods without a profit motive.

SUBSISTENCE ECONOMY- A type of economy