Final answer:
The political system in a country is responsible for establishing priorities and choosing policies to achieve desired outcomes at an acceptable cost. It deals with tradeoffs between equality and economic output through complex processes like voting cycles, reflecting diverse stakeholder preferences.
Step-by-step explanation:
The system that provides a way to establish priorities, choose policies, and act to get desired results and required resources at an acceptable cost is the political system. In the United States, this system has been the cornerstone of economic and political policy since its inception, balancing liberty and freedom of choice with the inherent inequality that comes from varying levels of wealth and income among citizens.
In terms of making decisions about the tradeoff between equality and economic output, societies or countries use their political systems, which can involve complex decision-making processes like voting cycles. Here, choices about policy are influenced not necessarily by majority rule, but rather by the order in which they're presented, debated, and the sequence of voting on them, reflecting the diversity of preferences among stakeholders.
A voting cycle is an example of how complex these decisions can be. This occurs when Choice A is preferred over Choice B, B is preferred over C, and C is preferred over A by different majorities. For instance, a country may have to decide between increasing defense spending, increasing government spending on health care, or cutting taxes.
These decisions highlight the intricacies within the political system, as well as the challenges in reaching a consensus that satisfies the majority. Such complexities underscore the challenge in achieving equitable outcomes alongside optimal economic output.
It is also noted that while economic theories may envision people and societies making decisions based on detailed analysis, such as drawing budget constraints or considering production possibilities frontiers, the reality of decision-making can be much messier. This realism brings into question the straightforward application of economic models to real-world policy-making, emphasizing the role that political systems play in managing complex and often conflicting societal preferences.