Exam 2 Review

Question 1

Debt-to-GDP Ratio

Answer 1

The ratio of a country’s national debt to its gross domestic product. By comparing what a country owes to what it produces, the debt-to-GDP ratio indicates the country’s ability to pay back its debt. As it grows up, shows less growth/productivity/profit (more distress). Public debt burden must be less than 60% of GDP to be a part of the Eurozone. In America, this idea created the Welfare State, resulting in the New Deal during the Great Depression of the 1930s.

Question 2

Protectionism

Answer 2

The theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports.This is what countries were doing, but globalization takes away these taxes. Historically, Protectionism is an obstacle in globalization. “The financial crisis of 2008 led to the demise of the Doha Round, as the recession that gripped the United States and Europe from late 2007 to 2009 triggered rising protectionist demands. “

Question 3

Tariff

Answer 3

A tax on imports or exports. Globalization breaks down this barrier to allow flow of goods, labor, and capital around the world. The GATT of 1944 demanded the lowering tariffs to take goods more frequently.

Question 4

Underemployment

Answer 4

Educated people are working at low paying/low skill jobs while undereducated people are out of work or only working part time. A product of solvency in the Eurozone. Unemployment/underemployment means no jobs in their chosen field and constipates the world economy.

Question 5

World Bank

Answer 5

An international organization dedicated to providing financing, advice and research to developing nations to aid their economic advancement founded in 1944. Lead to development around the world, better and cheaper trade, and agriculture funding.

Question 6

NAFTA (The North American Free Trade Agreement)

Answer 6

An agreement signed by Canada, Mexico, and the United States in 1994, creating a trilateral rules-based trade bloc in North America. Promise to bring jobs and wealth to US but didn’t work out.

Question 7

Hyperinflation

Answer 7

This is when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency, and causing the population to minimize their holdings of the local money. Hyperinflation is when inflation is over 10%. Prices are growing faster than wage growth. This happened in South American countries in the 1000% in 1980s.

Question 8

Capital

Answer 8

Wealth in the form of money or other resources owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing. Post WW2 (50s-60s), US has most capital so flows to other nations for reconstruction. A primary influence over all economic globalization is the quick and easy and largely free movement of capital around the world.

Question 9

European Union

Answer 9

The European Union is a politico-economic union of 28 member states that are located primarily in Europe. Created in 1992 in Maastricht, Netherlands. There was a 1999 deadline for a nation to become a part of the Eurozone. Not all nations in the European Union are in the Eurozone.

Question 10

Mao Zedong

Answer 10

1893–1976, Chinese Communist leader. Instead of urban factory workers, farmers are exploited. 50 million Chinese deaths (most deadly leader of history). Cultural Revolution in 1966 to create a Marxist state.

Question 11

Great Depression

Answer 11

An economic recession that began on October 29, 1929, following the crash of the U.S. stock market. The Great Depression originated in the United States, but quickly spread to Europe and the rest of the world. Lasting nearly a decade, the Depression caused massive levels of poverty, hunger, unemployment and political unrest.

Question 12

Federal Reserve

Answer 12

The central bank of the United States. It regulates the U.S. monetary and financial system. It is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. Established in 1913. Creates ultimate economic cohesion among all states.

Question 13

“Outsourcing”

Answer 13

A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. This nationalist problem is a major obstacle of globalization. When American companies outsource = less “American” jobs = disloyal.

Question 14

Deng Xiaoping

Answer 14

Chinese Communist leader. Head of power from 1976 to 1978. He was practical - do whatever is best for China. This opens China up to economic globalization (more capital, more industrialization).

Question 15

Austerity Measures

Answer 15

Official actions taken by the government, during a period of adverse economic conditions, to reduce its budget deficit using a combination of spending cuts or tax rises. “After Greece agreed to an EU bailout and austerity program in 2010 to avoid defaulting on soaring sovereign debts, Golden Dawn became a significant party at the national level. 46 However, the hard-left, anti-austerity party, Syriza, became the main opposition in 2012, winning more than twice as many votes as Golden Dawn.”

Question 16

Monetary Policy

Answer 16

Actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Creates economic/political stability. Catalyst for globalization.

Question 17

Dalai Lama

Answer 17

The spiritual head of Tibetan Buddhism and, until the establishment of Chinese communist rule, the spiritual and temporal ruler of Tibet. The current Dalai Lama is in exile in Tibet and is very vocal about his opinions of China.

Question 18

Boxer Rebellion

Answer 18

The Boxer Rebellion, Boxer Uprising or Yihetuan Movement was an anti-imperialist uprising which took place in China towards the end of the Qing dynasty between 1899 and 1901. Boxer Rebellion (society of the righteous fist). China wins independence.

Question 19

Opium Wars

Answer 19

A war between Great Britain and China that began in 1839 as a conflict over the opium trade and ended in 1842 with the Chinese cession of Hong Kong to the British, the opening of five Chinese ports to foreign merchants, and the grant of other commercial and diplomatic privileges in the Treaty of Nanking. Opium Wars (twice), China loses, Britain uses victory to dictate China.

Question 20

Eurozone

Answer 20

The group of European Union nations whose national currency is the euro. Must maintain a budget deficit no greater the 3% of GDP and public debt burden less than 60% of GDP. Deadline to join in 1999. United Europe.

Question 21

Subprime Lending

Answer 21

Means making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc. (i.e. Mortgages) Unstable loan - given to one that may not be able to carry burden of that debt. Catalyst to the 2008 recession.

Question 22

Globalization

Answer 22

The development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets. A primary influence over all economic globalization is the quick and easy and largely free movement of capital around the world.

Question 23

Jawaharlal Nehru

Answer 23

Jawaharlal Nehru was the first Prime Minister of India and a central figure in Indian politics before and after independence.

Question 24

“Great Leap Forward”

Answer 24

Chinese history, the campaign undertaken by the Chinese communists between 1958 and early 1960 to organize its vast population, especially in large-scale rural communes, to meet China’s industrial and agricultural problems. The Chinese hoped to develop labour-intensive methods of industrialization, which would emphasize manpower rather than machines and capital expenditure.

Question 25

World Trade Organization

Answer 25

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. Established in 1995. Prioritizes development first, leading to protests.

Question 26

International Monetary Fund

Answer 26

international organization headquartered in Washington, DC, of “188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Monitors value of currencies, loans to developing countries but have to reduce foreign barriers, economic liberalization. Established in 1944 at Bretton Woods.

Question 27

Bretton Woods

Answer 27

A landmark system for monetary and exchange rate management established in 1944. The Bretton Woods Agreement was developed at the United Nations Monetary and Financial Conference held in Bretton Woods, New Hampshire in 1944. America and Britain talk about how to avoid another economic depression. Products: International Monetary Fund (IMF) and Monetary Fund.

Question 28

“Dependent Origination”

Answer 28

states that all dharmas (“things”) arise in dependence upon other dharmas: “if this exists, that exists; if this ceases to exist, that also ceases to exist.”

Question 29

Trans-Pacific Partnership

Answer 29

Secretive, multinational trade agreement that threatens to extend restrictive intellectual property (IP) laws across the globe and rewrite international rules on its enforcement. China is our friend because they are part of this agreement.

Question 30

Cultural Revolution

Answer 30

In 1966, China’s Communist leader Mao Zedong launched what became known as the Cultural Revolution in order to reassert his authority over the Chinese government. Believing that current Communist leaders were taking the party, and China itself, in the wrong direction, Mao called on the nation’s youth to purge the “impure” elements of Chinese society and revive the revolutionary spirit that had led to victory in the civil war 20 decades earlier and the formation of the People’s Republic of China.