1. What is political economy? Why do many study it?
Political economy is the study of the interaction of politics and economics. It is widely studied because of the importance of economic growth and distribution.
2. Describe rational choice.
Rational choice is a method of analyzing and understanding human behavior by assuming that people act in an economically rational way (i.e., they work to maximize their gain).
3. Explain how fighting unemployment can drive up inflation.
Two of the best ways for the government to fight unemployment are to spend more money and to lower interest rates. But both of these methods increase demand, which drives up prices, and therefore inflation.
4. What are the main complaints of those who object to international financial institutions?
There are a number of different objections to international financial institutions. Some believe that global trade hurts the environment; others fear that it will cause a loss of jobs; others see the whole system as biased in favor of developed states.
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