CPO 2001 Lecture Notes - Lecture 6: Hyperinflation, Deflation, Free Trade

• School: University of Florida
• Department: Comparative Politics
• Course: CPO 2001
• Professor: Elischer, Sebastian

Document Summary

Political economy how politics and economies are related and how each affects the balance between equality and freedom. Ideal relationship between the state and the economy. Markets: interaction between forces of supply and demand. States regulate and protect markets and property. Components of political economy: public goods and social expenditures. Public goods: used by society, not privately owned: because some goods do not function well in the marketplace, examples: roads, national defense. Taxation: used to pay for public goods and social expenditures, taxations varies in who is taxed and how much is taxed, lower taxation rates could mean additional costs like copays. Legitimacy backed by the state: central banks control its supply, typically through interest rates, actions closely tied to inflation and unemployment, high unemployment is generally characterized by interest rates decreasing. Hyperinflation inflation of more than 50% a month for two months in a row: government prints money to cover basic expenditures.