The term "political economy" studies the interplay between politics and economics, examining how political institutions, processes, and power dynamics influence economic policies and outcomes. It analyzes how economic theories affect governance and public policy decisions, including taxation, trade, and regulation. Additionally, political economy explores how economic conditions can impact political behavior and stability. This field helps in understanding how well-being is distributed within a society and the effects of governmental actions on economic success and crises, making it a critical area for policy formation.