Chapter 5 Flashcards
Mercantilist practices were seen as essential to state power because
The accumulation of precious metals could be converted into military assets when needed
The mercantilist approach to trade is similar to what theoretical framework?
Realism
Balance of trade
Value of imports relative to exports
Comparative advantage
States differ in their abilities to produce different goods due to different resources and technology.
Monopoly
One supplier of an item
Oligopoly
A monopoly shared by just a few large sellers
Autarky
To avoid trading and try to produce all goods by itself. Also called self reliance
Protectionism hurts an economy in what way?
Consumers pay higher prices
Dumping
The sale of products in foreign markets at prices below the minimum level necessary to make a profit
Tariff
Tax imposed on certain types of goods
Quota
How many goods of a certain kind can be imported
Imposed to restrict growth of those products
Subsidies
Payments to a domestic industry that allow it to lower it’s prices without losing money
The world trade organization replaced what in 1995?
GATT
Most-favored-nation principle
Concept which says that trade restrictions imposed by a WTO member on its most favored trading partner must be applied equally to all WTO members
Largest, most comprehensive, regional free trade area is in
Europe
Cartels
An association of producers or consumers, or both, of a certain product formed to manipulate its price on the world market
Most prominent cartel in the international economy
OPEC
Most profitable goods involved in illicit trade
Drugs and weapons
The industrial revolution began in
Great Britain in the 18th century
Groups that oppose free trade because of its negative impacts include
Labor unions
The global currency that had value in all countries was
The US dollar
Fixed exchange rates
Official rates of exchange for currencies set by governments
Floating exchange rates
Rates determined by global currency markets in which private investors and governments alike buy and sell currencies
How do governments increase the value of currency?
Intervene in currency markets and buy a currency, increasing its value
