Competency 2.6 - analyze the features of global economics in terms of their impact on national and international economic systems

Question 1

principle of comparative advantage

Answer 1

says that trade should be based on the competitive opportunity costs between two countries; simply, whichever country can produce a good more cheaply should produce that good and trade it for a good that the country cannot produce cheaply

Question 2

Bretton Woods system

Answer 2

created at the end of World War II by 44 countries, the US dollar served as the focal point of this system as countries bought and sold dollars ro maintain their exchange rate

Question 3

International Monetary Fund (IMF)

Answer 3

created to supervise the exchange rate practices of member nationsand was intended to lend money to nations that were ubable to meet payment obligations (bailout)

Question 4

World Bank

Answer 4

funded through the sale of bonds, this institution loans money to developing nations for economic development

Question 5

balance of payments

Answer 5

an account that refers to the sum of a country’s transactions with other countries and is summarized in three main accounts: current, capital, and financial account balances

Question 6

current account

Answer 6

balance of payments accounts that primarily tracks the import and export of goods and services but also includes net international transfer payments and net international factor income

Question 7

financial account

Answer 7

balance if payments account that records trade-in assetts, such as gold, government securities, banking liabilities (deposits/loans), corporate securities, and fixed assetts such as real estate