Exam 3 Flashcards
bilateral
relations between two states, for example a bilateral summit is a high-level conference between two states
mercantilism
an economic policy that combines free enterprise and government. the government uses its power, including its military, to enhance private business, and probate business provides revenues to the government to maintain and enhance its power
protectionism
policy of blocking or restricting the trade from other countries in order to “protect” domestic business from economic competition with foreign companies
colonialism
the situation where one country takes over another country and administers it with local bureaucracy
metropole
the “mother city” or center of empire. the metropole of the british empire was london
begger thy neighbor
an economic policy that stresses trade protectionism and causes other countries to bear the cost of efforts at securing prosperity at home
absolute advantage
when a country is more efficient at producing a single good than another country
comparative advantage
being more efficient at producing a good or strive relative to another goof or service. even if one country has an absolute advantage over another in all products, both countries benefit by specializing in the products they each produce most efficiently (their comparative advantage) and trading for the others
Industrial Revolution
the transition of many of the worlds states from an agricultural economic system to one that was based on industry. during this period, factories replaced farms as the biggest producer in many countries
hyperinflation
a situation where a currency loses is value very quickly. regular inflation occurs at relative low levels (3-5%) but hyperinflation means a currency can lose most of its value in a year, month or even day
trade war
a situation when many or all states engage in protectionism, the states try to block imports and promote exports, nut since al countries do this, very little international trade occurs
central planned (or command) economy
an economy that is run by the government rather than private citizens. examples include the Soviet Union and North Korea
Liberal International Economic Order (LIEO)
the post-World War 2 international economic system but on commitments to free trade and free market economics, with international institutions to help countries coordinate and cooperate
Bretton Woods System
the global economic system established in the US and other countries after WW2 to promote capitalism, free trade, and policy coordination. created the World Bank and IMF
World Bank
organization created in 1945 that provide loans and grants to countries for long-term development. the world bank stated by helping fund the reconstruction of Europe after WW2 and later focused on helping countries in the developing world grow their economies
International Monetary Fund (IMF)
organization created to help maintain a cooperative international system. the IMF helps countries facing balance-of-payments problems with short-term loans and also helps counties reschedule their debt
gold standard
US made the dollar gold back and equals $35 per ounce
austerity program
program of severely restricting government spending, often on welfare programs, imposed when the country must balance its accounts
General Agreement on Tariffs and Trade( GATT)
an organization of countries that agree to work together to reduce trade barriers and promote free trade. tore members were considered “most favored nations” and received preferential trade agreements. the GATT was replaced but the World Trade Organization
Most-Favored Nation (MFN)
a preferential trade status that members of the GATT gave to other members. MFN could also be granted to non-members if a country was close to do so. The US granted China MFN stars for years before China entered the agreement
non-tariff barrier
a requirement that foreign goods or services must meet that is specifically designed to block or obstruct those goods or services from sale in that market
liberal capitalism
a philosophy of complete or near complete free markets and no governmental regulation in the economy. there are variations to liberal capitalism, but the idea is minimal government involvement in the economy
World Trade Organization
basically enforced what the GATT laid out.
devalue
when currency loses its value compared to other currencies
globalization
the global spread of technology, money, products, culture, and opinions through foreign trade, investments, transportation, and cultural exchange
islamist
extreme fundamentalists muslims
fair trade
the concept that producers should be paid a fair price do their products
North American Free Trade Agreement (NAFTA)
a free trade agreement between Canada, Mexico and the US. The agreement greatly reduced all barriers to trade between the countries and resulted in a significant increase in trade of goods and services between all three
Eurozone
the portion of Europe that uses euro currency instead of the national currency
supranational organization
an institute, organization, or law that is over other states EX: EU is a supranational organizations because it has authority over many European States
