What does the term 'party system' refer to?

The term 'party system' refers to the political structure of various parties within a system. This encompasses how political parties operate, interact, and compete within a given political framework. It includes the number of parties, the strength and influence of each party, and the way parties are organized and function in relation to each other and the electorate.

Understanding the party system is vital because it shapes policy-making, electoral behaviors, and the overall governance of a political entity. It elucidates the dynamics among parties, such as whether a system is characterized by two major parties, multiple parties, or fragmented party representation, and examines factors such as party ideologies and electoral rules that influence the system's structure.

The other options, while related to political parties, focus on specific aspects that do not encapsulate the broader concept of a party system. For instance, the number of parties in an election simply provides a quantitative measure rather than a qualitative understanding of party interactions. Similarly, party funding refers to the financial aspects that support parties, and the process of forming a coalition government pertains more to governance in specific contexts rather than the overarching structure of parties within a political system.