chapter 5

Question 1

Mercantilism

Answer 1

An economic theory and a political ideology opposed to free trade; it shares with realism the belief that each state must protect its own interests without seeking mutual gains through international organizations.

Question 2

Economic liberalism

Answer 2

An alternative approach, generally shares with liberal internationalism a belief in the possibility of cooperation to realize common gains. It holds that, by building international organizations,institutions and norms,states can mutually benefit from economic exchanges.

Question 3

Free trade

Answer 3

The flow of goods and services accross national boundaries unimpeded by tariffs or other restrictions.

Question 4

balance of trade

Answer 4

The value of a states exports relative to its imports

Question 5

Comparative advantage

Answer 5

The principle that says states should specialize in trading goods that they produce with the greatest relative efficiency and at the lowest relative cost(relative, that is, to other goods produced by the same state).

Question 6

autarky

Answer 6

A policy of self reliance avoiding or maximizing trade and trying to produce everything one needs(or the most vital things) by onself

Question 7

Protectionism

Answer 7

The protection of domestic industries against international competition, by trade tariffs and other means.

Question 8

ward off

Answer 8

to prevent someone or something unpleasant from harming or coming close to you:
In the winter I take vitamin C to ward off colds.

Question 9

dumping

Answer 9

The sale of products in foreign markets at prices below the minimum level necessary to make a profit

Question 10

Tariff

Answer 10

A tax imposed on certain types of imported goods(usually as a percentage of their value) as they enter the country.

Question 11

Nontariff barriers

Answer 11

Forms of restricting imports other than tariffs, such as quotas (ceilings on how many goods of a certain kind can be imported).

Question 12

World trade Organization

Answer 12

A global, multilateral intergovermental organization that promotes,monitors and adjudicates interantional trade.

Question 13

General agreement on Tariffs and trade(gaat)

Answer 13

A world organization established in 1947 to work for freer trade on a multilateral basis;the GATT was more of a negotiating framework than an administrative institution.

Question 14

Doha Round

Answer 14

A series of negotiations under the world trade organizations that began in Doha Quatar in 2001.It followed the Uruguay Round and has focused on agricultural subsidies,intellectual property and other issues.

Question 15

North American Free trade Agreement(NAFTA)

Answer 15

A free trade zone encompassing the United States, Canada, and Mexico since 1994.

Question 16

Organization of the Petroleum Exporting Countries (OPEC)

Answer 16

The most prominent Cartel in the international economy;its members control about half of the world’s total oil exports, enough to affect the world price of oil significantly.

Question 17

Centrally planned economy

Answer 17

An economy in which political authorities set prices and decide on quotas for production and consumption of each commodity according to a long term plan.

Question 18

Transitional economies

Answer 18

Countries in Russia and Eastern Europe that are trying to convert from communism and capitalism,with various degrees of success.

Question 19

Hyperinflation

Answer 19

An extremely rapid,uncontrolled rise in prices, such as occured in Germany in the 1920s and in some thrid world countries more recently.

Question 20

Fixed exchange rates

Answer 20

The official rates of exchange for currencies set by governments ;not a dominant mechanism in the international monetary system since 1973

Question 21

Floating exchange rates

Answer 21

The rates determined by global currency markets in which private investors and governments alike buy and sell currencies.(there is supply and demand for each state’s currency)

Question 22

devaluation

Answer 22

A unilateral move to reduce the value of a currency by changing a fixed or official exchanged rate.

Question 23

bretton woods system

Answer 23

A post world war II arrangement for managing the world economy established at a meeting in Bretton Woods, New hampshire,in 1944.Its main institutional components are the world bank and the international monetary fund(imf)

Question 24

World Bank

Answer 24

Formally the international bank for reconstruction and devellopment (IBRD), an organization that was established in 1944 as a source of loans to help reconstruct the european economies.

Question 25

International monetary fund(IMF)

Answer 25

Coordinates international currency exchange, the balance of international payments , and national accounts.

Question 26

balance of payments

Answer 26

A summary of all the flows of money into and out of a country.It includes three transactions:the current account (including the merchandise trade balance), flows of capital and changes in reserves, which make the national account balance.

Question 27

Keynesian economics

Answer 27

The view that governments should sometimes use deficit spending to

Question 28

Fiscal Policy

Answer 28

A governments decision’s about spendong and taxation

Question 29

Multinational corporation

Answer 29

A company based in one state with afiliated branches or subsidiaries operating in other states.

Question 30

Developing countries

Answer 30

States in the global south, the poorest regions of the world.

Question 31

Millenium developmental goals

Answer 31

The UN adopted targets for basic needs measures to be achieved by 2015.

Question 32

Subsistence farming

Answer 32

Rural communities growing food mainly for their own consumption rather than for sale in local or world markets.

Question 33

Cash crops

Answer 33

Agricultural goods produced as commodities for export to world markets.

Question 34

Migration

Answer 34

Movement between states.

Question 35

Refugees

Answer 35

People fleeing their countries to find refugee from war,natural disaster, or political persecution.International law distinguishes from migrants.

Question 36

Remittances

Answer 36

Money sent home by migrant workers to individuals(usually relatives)in their country of origin.

Question 37

Resource curse

Answer 37

The difficulties faced by resource rich developing countries, including dependence on exporting one or a few commodities whose price fluctuate, as well as potentials for corruption and inequality.

Question 38

Neocolonialism

Answer 38

The continuation ina former colony, of colonial exploitation without formal political control.

Question 39

dependency theory

Answer 39

A theory that explains the lack of capital accumulation in the third world.These scholars define dependency as a situation in which accumulation of capital cannot sustain itself internally.

Question 40

enclave economy

Answer 40

A historically important form of dependency in which foreign capital is invested in a third world country to extract a particular raw material in a aparticular place- usually mine, oil, well or plantation.

Question 41

Newly industrialized economies

Answer 41

Third world states that have achieved self-sustainable capital accumulation,with impressive economic growth.

Question 42

four tigers/four dragons

Answer 42

The most successfully newly industrialized areas of east Asia:South Korea,Taiwan,Hong Kong and Singapore.

Question 43

Microcredit

Answer 43

The use of very small loans to small groups of individuals, ofthen women, to stimulate economic development.

Question 44

Technology transfer

Answer 44

Third world’s states acquisitionof technology(knowledge,skills,methods,designs,speciallized equipment,etc.) from foreign sources, usually in conjunction with direct foreign investment or similar operations.

Question 45

Brain drain

Answer 45

The problems of losing skilled workers to richer countries(this has impeded economic development)

Question 46

IMF conditionally

Answer 46

An agreement to loan IMF funds on the condition that certain government policies are adopted. Dozens of third world states have entered into such agreements with the IMF.

Question 47

Foreign assistance

Answer 47

Money or other aid made available to third world states to help them speed up economic development or meet humanitarian needs.

Question 48

billateral aid

Answer 48

Government assistance that goes directly to third world governments as state to state aid.

Question 49

Multilateral aid

Answer 49

Government foreign aid from several states that goes through a third party, such as the UN or another agency

Question 50

UN Development Program(UNDP)

Answer 50

A program that coordinates the flow of assistance through the UN and manages 6000 projects at once around the world(focusing on technical development assistance)

Question 51

Peace Corps

Answer 51

An organization started by President John Kennedy in 1961 that provides U.S volunteers for technical development assistance in third world states

Question 52

Oxfam America

Answer 52

A private charitable group that works with local third world communities to determine the needs of their own people and to carry out development projects.Oxfam does not operate the projects but provides funding to local organizations to carry them out.