Exam 1 Flashcards
Globalization
Process in which people, ideas and goods spread throughout the world, spurring more interaction and integration between screens worlds governments and economies
Political Economy
study of production of trade and their links with custom government and law
International political economy
study of economics and international relations
Institutions
set of rules for economic purposes
Arbitrage
Purchase and sale of an asset to profit from a difference in the price
Transaction costs
expenses incurred when buying or selling a good or service
Specialization
method of production where I buns es focuses on production of certain product or services
David Ricardo
Principles of Politicsl Economy and Taxation
Returns to scale
changes in output as all factors change by the same proportion
Comparative Advantage
Ability of any actor to produce goods at lower opportunity costs than other economic actors
Supply / Demand
you know what this is
Static gains from trade
increase in utility or level of welfare where there is trade between two countries
Protectionism
theory shielding a country’s domestic industries from foreign competition by taxing imports
Tarrif
tax imposed on import d goods/services used to restrict trade
Factors
Land Labor Capital- Factor Endowment input used in production
Heckscher-Ohlin model
Theory countries export what can be most efficiently produced
Land vs Capital
Export goods high factor endowment
Import goods with lower FE
Stopper Samuelson
Rise in relative price of good will lead to rise in return to that factor which used used most intensively in production of good.
Price of capital intensive good go up owners of capital win, if go down labor wins
Long run attempts effects of relative changed of factor incomes
Ricardo-Vine Model
Immobile factors in export competing industry benefit from free trade: those in import competing lose
Rybcznksi model
Increasing one factor endowment increase output of industry that uses the factor intensively decrease output of the other industry
Mercantilism
economic nationalism purpose of building wealthy and powerful state, restraining imports, encouraging exports
Terms of trade
Value of export of a country relative to the value of its import
BEIC
Joint stock company
Jean Baptise colbert
French East India Company, Mercantilism, French secratary of state
Gold Standard
commitment by participating countries to fix the prices of their domestic currencies to gold
Corn Laws
Restricted imports on grain imposed tariffs on imported grain
Anti Corn League
Laisserz faire, industrialists, Whigs
Inflation
Rate at which goods rising
Hegemon
Influence control over another country
Bretton Woods Summit
Avoid protectionism, 740 delegates, try to rebuild Europe
July 1, 1994 Keynes and White
Breton woods monetary system
Fixed exchange rate system, all currencies fixed to US fixed to gold
IMF
New international lender, aid in development
Fixed exchange rate
Exchange rate ties to another countries gold or currency
Floating exchange rates
Currency price is set by the forex market based on S/D
Indirect gold standard
Bretton woods
Keynes
Advisor to UK, wanted currency to denominate all others
Harry Dexter White
wanted US to have predominant role in global economics, assistant to secretary of treasure
World Bank
Rebuilding Europe for infrastructure financing and education
Capital and Capital controls
Funds used for production controlled by countries. (Limit taking money out on account)
Post Bretton Woods
Fixed and floating regimes
Reserve currency
Held by central banks as means to pay off international debt obligations
Balance of payments
Record summarizes economies transactions with the r st of the world for a time
Impossible trinity
Free capital flows, independent monetary policy, fixed exchange rates
GATT
Trade treaty to boost economic recovery, increase trade through eliminating tariffs
Speculative attack
Massive shorting and devaluing of currency
Money role
Medium of exchange by a government
Money supply
Entire stock of currency in economy
M1 = cash + deposits
MB= cash + reserved
Interest rate
Amount charged as percentage of principle
Bonds
Stock
Creation of money by commercial banks
M1 = cash plus deposits
Federal reserve
Central bank of US , adjust long term IR
Federal open market committee
Sets federal funds rate; banks must follow
Board of Governance Janet Yellen
Federal reserve board
Reserve requirements
Amount of cash a bank must hold in reserve against deposits made by customers
Discount window rate
Federal money rate, fed charges for overnight loans
OMO
Buying and selling of government to expand/contract amount of money in banking system (buying selling of bonds to regulate economy)
Quantitative easing
Massive purchasing of OMO
Mortgage backed securities
Asset Secured by mortgage
Government securities
Bond by government authority of promise of payment upon maturity
Policy goals of central banks
Maintain stable prices
Reduce time consistency
Expectations
Inflation interest rates
4 major alternative approaches to globalization
Liberalism, Marxism, Constructivism, Realism
