| Terms |
Definitions |
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Primitives
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exogenous
technology
endowments
preferences
people
institutions
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Downsian Model
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2 Candidates
Elected Candidate chooses a policy.
Set of votes N with prefs V(x)
Promises are binding.
Winning is only goal.
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Public Good
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Rival in consumption, excludable.
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authority
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legitimate power institutionalized in organizations
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fiscal policy
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Economic policies involving taxing, spending, and deficit levels.
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Primitives of the Game
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players, strategies/actions, payoffs
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Plurality Rule
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Not Condorcet Consistent
With runoff is not Condorcet consistent.
May select a CL
With runoff never selects CL.
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entitlement programs
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Social welfare programs that provide classes of people with legally enforceable rights to benefits.
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tax expenditures
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Revenues lost to the federal government because of exemptions, exclusions, deductions, and special-treatment provisions in tax laws.
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monetary policy
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Economic policies involving the money supply and interest rates.
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government bonds
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Certificates of indebtedness that pay interest and promise repayment on a future date.
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Sequential Majority Rule
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Condorcet Consistent
Never selects a CL
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Contract Cruve
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locus of pareto optimal/ efficient allocations
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socialism
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an economic system based on public ownership and government control of the economy
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capitalism
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an economic system based on private ownership of property and competition in producing and selling goods and services
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mixed economy
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an economic system that contains elements of both capitalism and socialsim
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progressive taxation
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System in which higher income groups pay a larger percentage of their incomes in taxes than do lower income groups.
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monetarist economic theory
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Argues economic stability can be achieved only by holding the rate of monetary growth to the rate of the economy's own growth.
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unemployment rate
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Percentage of the civilian labor force who are not working but who are looking for work or waiting to return to or begin a job.
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Social Planner Problem
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embeds both efficiency and equity considerations.
exhaustive summary of economy
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ideological conservatives
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US citizens who, in theory, are opposed to big government because of their belief in free enterprise, rugged individualism, and capitalism
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power
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the ability to control the behavior of others, even against their will
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individual income tax
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Taxes on individuals' wages and other earned income, the primary source of revenue for the U.S. federal government.
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Utilitarian SWF
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Sum of utility functions in a society. MRS=1, consstant, straight line. Weighted Utilitarian SWF puts alpha and 1-alpha in front. redistribution does not depend on relative levels of utility
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Subgame Perfect Equilibrium
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A subgame perfect equilibrium is a pair of strategies (one for each player) which is a nash equilibrium at each decision made. Solve by backward induction (tree diagram)
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political party
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a group organized for the purpose of gaining government offices
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Pareto Optimality
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An allocation is PO if it is feasible and there is no other feasible allocation that Pareto dominates it- i.e. that makes one agent strictly better off and no other agents strictly worse off
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