FSOT Master 12 Flashcards
(500 cards)
1
Q
Perfectly discriminating monopolist
A
A firm that charges each buyer exactly his or her reservation price.
2
Q
Perfectly elastic demand
A
The demand for a good is perfectly elastic with respect to price if its price elasticity of demand is infinite.
3
Q
Perfectly elastic supply
A
The supply of a good is perfectly elastic with respect to price if its price elasticity of supply is infinite.
4
Q
Perfectly elastic supply curve
A
A supply curve whose elasticity with respect to price is infinite.
5
Q
Perfectly inelastic demand
A
The demand for a good is perfectly inelastic with respect to price if its price elasticity of demand is zero.
6
Q
Perfectly inelastic supply
A
The supply of a good is perfectly inelastic with respect to price if its price elasticity of supply is zero.
7
Q
Perfectly inelastic supply curve
A
A supply curve whose elasticity with respect to price is zero.
8
Q
Perhaps the most common political argument for government intervention into the free flow of trade is that
A
it is necessary for protecting jobs and industries from foreign competition.
9
Q
Personal Consumption Expenditure (PCE) Deflator
A
A measure of prices of goods that consumers buy that allows yearly changes in the basket of goods that reflect actual consumer purchasing habits.
10
Q
Personal Responsibility Act
A
The 1996 federal law that transferred responsibility for welfare programs from the federal level to the state level and placed a five-year lifetime limit on payment of afdc benefits to any given recipient.
11
Q
Phillips Curve
A
Describes the general inverse relationship between unemployment and inflation.
12
Q
Planned aggregate expenditure (PAE)
A
Total planned spending on final goods and services.
13
Q
Policy reaction function
A
Describes how the action a policymaker takes depends on the state of the economy.
14
Q
Political Union
A
the evolution of a complete political entity cf: U.S.A. vs
the European Union.
15
Q
Pork barrel spending
A
A public expenditure that is larger than the total benefit it creates but that is favored by a legislator because his or her constituents benefit from the expenditure by more than their share of the resulting extra taxes.
16
Q
PORTER’S DIAMOND OF NATIONAL ADVANTAGE?
A
Porter’s notion is that 6 sets of variables shape the environment in which firms compete:
- Factor endowments
- Demand conditions
- Related and supporting industries
- Firm’s structure, strategy, and rivalry
- Chance
- Government Actions
17
Q
Portfolio allocation decision
A
The decision about the forms in which to hold one’s wealth.
18
Q
Positional arms control agreement
A
An agreement in which contestants attempt to limit mutually offsetting investments in performance enhancement.
19
Q
Positional arms race
A
A series of mutually offsetting investments in performance enhancement that is stimulated by a positional externality.
20
Q
Positional externality
A
Occurs when an increase in one person’s performance reduces the expected reward of another’s in situations in which reward depends on relative performance.
21
Q
Positive analysis
A
Addresses the economic consequences of a particular event or policy, not whether those consequences are desirable.
22
Q
Positive economic principle
A
One that predicts how people will behave.
23
Q
Positive externality
A
See External benefit.
24
Q
positive sum game?
A
A situtation where all countries can benefit from trade.
25
potental money multiplier
the reciprocal of the required reserve ratio, assuming no leakages into currency and no excess reserves
26
Potential Income
the level of income that the economy technically is capable of producing with out generating accelerating inflation.
27
Potential Output Level
The output of an economy when all of the productive factors, including labor, are used at their normal rate. In terms of unemployment, this corresponds to a 6% unemployment rate.
28
Poverty
The state of being poor, variously defined. Sometimes defined relatively — by reference, for example, to the average household income in a nation or region. Sometimes defined absolutely — by reference, for example, to the income needed to provide for adequate food, housing, and clothing in a nation or region.
29
Poverty Threshold
The income below which a family is considered to live in poverty.
30
precautionary demand
holding money to meet unplanned expenditures and emergencies
31
Precautionary saving
Saving for protection against unexpected setbacks, such as the loss of a job or a medical emergency.
32
Predatory Pricing
Practice of pricing to drive current competitors out of business and to discourage new entrants in a market so that a firm can enjoy future profits
33
Present value of a perpetual annual payment
For an annual interest rate r, the present value (PV) of a perpetual annual payment (M) is the amount that would have to be deposited today at that interest rate to generate annual interest earnings of M: PV = M / r.
34
Price
The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.
35
Price Ceiling
A government-imposed limit on how high a price can be charged.
36
Price Discrimination
Practice of charging different prices to different consumers for similiar goods
37
Price Elasticity indicates what?
Price elasticity indicates how responsive the quantity demanded is to the price.
38
Price elasticity of demand
The percentage change in the quantity demanded of a good or service that results from a 1 percent change in its price.
39
Price elasticity of supply
The percentage change in the quantity supplied that will occur in response to a 1 percent change in the price of a good or service.
40
Price Floor
A government-inposed limit on how low a price can be charges.
41
Price index
A measure of the average price of a given class of goods or services relative to the price of the same goods and services in a base year.
42
Price leadership
Pattern of pricing in which one firm regularly announces price changes that other firms then match
43
Price level
A measure of the overall level of prices at a particular point in time as measured by a price index such as the CPI.
44
Price Rigidity
Characteristics of oligopolistic markets by which firms are reluctant to change prices even if costs or demands change
45
Price setter
A firm with at least some latitude to set its own price.
46
Price Signaling
Form of implicit collusion in which a firm announces a price increase in the hope that other firms will follow suit
47
Price Support
Price set by government above free-market level and maintatined by governmental purchases of excess supply
48
Price taker
A firm that has no influence over the price at which it sells its product.
49
Principal amount
The amount originally lent.
50
Principal-Agent problem
Problem arising when agents purseue their own goals frather than the goals of principals
51
Principle
The initial amount of money given as a loan.
52
Prisoner's dilemma
A game in which each player has a dominant strategy, and when each plays it, the resulting payoffs are smaller than if each had played a dominated strategy.
53
Private Good
A good that, when consumed by one individual, connot be consumed by another.
54
Private saving
The saving of the private sector of the economy is equal to the after-tax income of the private sector minus consumption expenditures (Y − T − C); private saving can be further broken down into household saving and business saving.
55
Producer Price Index (PPI)
An index of prices that measures average change in the selling prices received by domestic producers of goods and services over time.
56
Producer Surplus
Price the producer sells a product for less the cost of producing it.
57
Producers
People and firms that use resources to make goods and services.
58
Product Life-Cycle Theory?"
Raymond Vernon... Proposed that in the life-cycle of products that their production is moved from more developed to lesser developed countries in order to lower costs.
59
Production
The transformation of factors into goods and services.
60
Production Function
Y = A f (L,K,H,N)
sets out the relationship
between the quantity of inputs used in production and the quantity of
output from production
61
Production possibilities curve
A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good.
62
Productive Efficiency
Achieving as much output as possible from a given amount of inputs or resources.
63
Productivity
Output per unit of input.
64
Profit
Difference between total revenue and total cost
65
Profitable firm
A firm whose total revenue exceeds its total cost.
66
Profit-maximizing firm
A firm whose primary goal is to maximize the difference between its total revenues and total costs.
67
Progressive Tax
A tax whose rates increase as a person's income increases.
68
Propagated in the 16th and 17th centuries, __________ advocated that countries should simultaneously encourage exports and discourage imports.
mercantilism
69
properties of the multiplier
the smaller the marginal propensity to save, the larger the multiplier; the larger the marginal propensity to consume, the larger the multiplier
70
Property Rights
Legal protection for the boundaries and possession of property. Assigning of property rights to individuals, collectives, or governments will depend on the economic system.
71
Proportional income tax
One under which all taxpayers pay the same proportion of their incomes in taxes.
72
Protectionism
The view that free trade is injurious and should be restricted.
73
Public Assistance
Means-testeed social programs targeted to the poor and providing financial, nutritional, medical, and housing assistance.
74
Public Choice Analysis
The study of decision making as it affects the organization and operation of government and other collective organizations. Involves the application of economic principles to political science topics.
75
public debt
the total value of all outstanding federal government securities
76
Public Finance
Grovernment's taxing and spending policies.
77
Public Good
Nonexclusinve an nonrivla good: the marginal cost of provision ot an additional consumer is zero and people cannot be excluded from consuming it
78
Public saving
The saving of the government sector is equal to net tax payments minus government purchases (T − G).
79
Purchasing Power
The amount of goods and services that a unit of currency can buy.
80
Purchasing power parity (PPP)
The theory that nominal exchange rates are determined as necessary for the law of one price to hold.
81
Pure commons good
One for which nonpayers cannot easily be excluded and for which each unit consumed by one person means one less unit available for others.
82
Pure monopoly
The only supplier of a unique product with no close substitutes.
83
Pure private good
One for which nonpayers can easily be excluded and for which each unit consumed by one person means one less unit available for others.
84
Pure public good
A good or service that, to a high degree, is both nonrival and nonexcludable.
85
Pure Strategy
Strategy in which a player makes a specific choice or takes a specific action
86
Quantity Demanded
the amount of a good that buyers are willing
| and able to purchase; falls when the price of the good rises
87
Quantity equation
Money times velocity equals nominal GDP: M × V = P × Y.
88
Quantity Supplied
the amount of a good that sellers are willing
| and able to purchase; rises when the price of the good rises
89
Quantity Theory of Money
The theory that says that the value of money is based on the amount of money in circulation, that is, the money supply.
90
quantity theory of money and prices
the hypothesis that changes in the money supply lead to equiproportional changes in the price level
91
Quotas
In international trade, limits on the quantity of a product that may be imported or exported, established by government laws or regulations; in command economies, more typically a production target assigned by government planning agencies to the producers of a good or service.
92
Rate of inflation
The annual percentage rate of change in the price level, as measured, for example, by the CPI.
93
Rate of Return regulation
The maximum price allowed by a regulatory agency is based on the rate of return that a firm will earn
94
Rational person
Someone with well-defined goals who tries to fulfill those goals as best he or she can.
95
Rational spending rule
Spending should be allocated across goods so that the marginal utility per dollar is the same for each good.
96
Rationing function of price
Changes in prices that distribute scarce goods to those consumers who value them most highly.
97
Real Deficit
The nominal deficit adjusted for inflation.
98
real diposable income
Real GDP minues net taxes, or after-tax real income (given all of the simplifying assumptions of the Keynesian model)
99
Real Exchange Rate
Nominal interest rate adjusted for expected inflation.
100
Real GDP
A measure of GDP in which the quantities produced are valued at the prices in a base year rather than at current prices; real GDP measures the actual physical volume of production.
101
Real Interest
The percent of the amount borrowed paid each year to the lender by the borrower in return for the use of the money adjusted for inflation.
102
Real price
Dollar price of a good relative to the average dollar price of all other goods and services.
103
Real quantity
A quantity that is measured in physical terms—for example, in terms of quantities of goods and services.
104
Real wage
The wage paid to workers measured in terms of purchasing power; the real wage for any given period is calculated by dividing the nominal (dollar) wage by the CPI for that period.
105
Recession
A decline in real output that persits for more than two consecutive quarteers of a year.
106
Recessionary gap
A positive output gap, which occurs when potential output exceeds actual output (Y* > Y).
107
recognition time lag
the time required to gather information about the current state of the economy; months may elapse before national economic problems can be identified
108
REGIONAL ECONOMIC INTEGRATION (TRADING GROUPS)?
Groups of Countries come together in order to improve economic conditions in their countries.
109
Regressive Tax
A tax whose rates decrease as income rises.
110
Related and supporting industries" in Porter's Theory?
Presence of supplier and related industries
111
relating income to saving and consumption
saving = disposable income - consumption; or consumption + saving = disposable income
112
relationship between the price of existing bonds and the rate of interest
the market price of existing bonds (and all fixed-income assets) is inversely related to the rate of interest prevailing in the economy
113
Relative price
The price of a specific good or service in comparison to the prices of other goods and services.
114
Rent
The income from a factor of production that is in fixed supply.
115
Rent Control
A price ceiling on rents, set by government.
116
Rent-seeking
The socially unproductive efforts of people or firms to win a prize.
117
Repeated game
Game in which actions are taken and payoffs received over and over again
118
Repeated prisoner's dilemma
A standard prisoner's dilemma that confronts the same players repeatedly.
119
required reserve ratio
the percentage of total transactions deposits that the Fed requires dopository institutions to hold in the form of vault cash or deposits with the Fed
120
Reservation Prices
Maximum price that a customer is willing to pay for a good
121
Reserve
Money not given out in loans that is available for repaying depositors.
122
Resource seeking?"
to ensure that a firm can always access resources that are essential to a firm's long run survival.
123
Resources
The three (or four) basic kinds of resources used to produce goods and services: land or natural resources, human resources (including labor and entrepreneurship), and capital.
124
Responding to Competitive dynamics?"
achieving First Mover Advantages or to responding to a rival's behavior in entering a new geographic market
125
retaliation?
A tool that some Governments use to try to force other governments to play by the rules.
126
Revaluation
An increase in the official value of a currency (in a fixed-exchange-rate system).
127
Reverse Engineering
The process of a firm buying other firms' products, disassembling them, figuring out what;s special about them, and then copying them within the limits of the law.
128
Ricardian Equivalence theorem
the proposition that an increase in the government budget deficit has no effect on aggregate demand
129
Rise
See Slope.
130
Risk premium
The rate of return that financial investors require to hold risky assets minus the rate of return on safe assets.
131
Risk-averse person
Someone who would refuse any fair gamble.
132
Risk-neutral person
Someone who would accept any gamble that is fair or better.
133
Robert Reich's suggestion about the global economy?
economic national identity is becoming increasingly superfluous, increases in outsourcing is leading to the emergence of Global Products rather than defining products with a "National identity"
134
Roles of Central Banks
perform banking functions for their nations' governments; provide financial services for private banks; conduct their nations' monetary policies
135
Rule of 70'
if something grows at a rate of x% a year, it will double in approximately 70/x years.
136
Rule of 72
The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.
137
Run
See Slope.
138
Salary
Payments for labor resources; unlike wages, not explicitly based on the number of hours worked. See also Wages.
139
Saving
Current income minus spending on current needs.
140
saving function
the complement of the consumption function
141
Saving rate
Saving divided by income.
142
savings deposits
interest-earning funds that can be withdrawn at any time without payment of a penalty
143
Say's Law
A law that staes that supply creates its own demand.
144
Scarcity
The condition that exists when human wants exceed the capacity of available resources to satisfy those wants; also a situation in a resource has more than one valuable use. The problem of scarcity faces all individuals and organizations, including firms and government agencies.
145
Second Degree price discrimination
Practice of chargin diferent prices per unit for different quanitities of the same good or service
146
Secure Debt
Credit with collateral (a house or a car, e.g.) for the lender
147
Seller's reservation price
The smallest dollar amount for which a seller would be willing to sell an additional unit, generally equal to marginal cost.
148
Seller's surplus
The difference between the price received by the seller and his or her reservation price.
149
Sequential game
Game in which players move in turn, responding to each other's actions and reactions
150
Services
Activities performed by people, firms, or government agencies to satisfy economic wants.
151
Share Distribution of Income
The relative division of total income amoung income groups.
152
Shared consumption
A property of a good or service such that it can be used by many without diminishing another’s ability to consume the same good; examples include street lights or radio broadcasts.
153
Sherman Antitrust Act
A U.S. law designed to regulate the competitive process.
154
Shoeleather Cost of Inflation
Costs of expected inflation caused by people having to make more trips to the bank to make withdrawals because they do not want to keep cash on hand.
155
Short run
A period of time sufficiently short that at least some of the firm's factors of production are fixed.
156
Shortage
The situation that results when the quantity demanded for a product exceeds the quantity supplied. Generally happens because the price of the product is below the market equilibrium price.
157
Short-Run Aggregate Supply (SAS) Curve
A curve that specifies how a shift in the aggregate demand curve affects the price level and real output in the short run, other things constant.
158
Short-run aggregate supply (SRAS) line
A horizontal line showing the current rate of inflation, as determined by past expectations and pricing decisions.
159
Short-run equilibrium
A situation in which inflation equals the value determined by past expectations and pricing decisions, and output equals the level of short-run equilibrium output that is consistent with that inflation rate; graphically, short-run equilibrium occurs at the intersection of the AD curve and the SRAS line.
160
Shutdown Point
The point below which the firm will be better off if it temporarily shuts down than it will if it stays in business.
161
Side-effects from taxes
Inefficiency
| Prevention of some mutually beneficial transactions from occurring.
162
Signaling
An action taken by an infomed party that reveals information to an uninformed party and thereby partially offsets adverse selection.
163
simplifying assumptions of Keynesian model
businesses pay no indirect taxes (ex. sales taxes); businesses distribute all of their profits to shareholders; there is no depreciations (capital consumption allowance), so gross private domestic investment = net investment; the economy is closed (there is no foreign trade)
164
Sin Tax
A tax that discourages activities society believes are harmful (sinful).
165
Since the 1960s, there have been two notable trends in the demographics of the multinational enterprise. These two trends have been:
the rise of non-U.S. multinationals and the growth of mini-multinationals
166
Skill-biased technological change
Technological change that affects the marginal products of higher-skilled workers differently from those of lower-skilled workers.
167
Slope
In a straight line, the ratio of the vertical distance the straight line travels between any two points (rise) to the corresponding horizontal distance (run).
168
Social Capital
The habitual way of doing things that guides people in how they approach production.
169
Social Security System
A social insurance program that provides financial benefits to the elderly and disabled and to their eligible dependents and/or survirors.
170
Socialism
an economic system based on individuals' goodwill toward others, not on their own self-interest, and in which, in principle, society decides what, how, and for whom to produce.
171
Socially optimal quantity
The quantity of a good that results in the maximum possible economic surplus from producing and consuming the good.
172
Sole Proprietorship
A buisness htat has only one owner.
173
specific tariff?
A Tariff of a certain amount of money per weight unit of good.
174
Specific Tax
Tax of a certain amount of money per unit sold
175
Specil Interest Group
An organization of people with a particular legislative concern. They work together to gather information, lobby politicians, and publicize their concern.
176
Speculative attack
A massive selling of domestic currency assets by financial investors.
177
Stabilization policies
Government policies that are used to affect planned aggregate expenditure, with the objective of eliminating output gaps.
178
Stackelberg Model
Oligopoly model in which one firm set its output before other firms do.
179
Stagflation
The combination of high and accelerating inflation and high unemployment.
180
Standard & Poor's ?
A subsidiary of McGraw-Hill that publishes financial research and analysis on stocks and bonds. It is one of the top three players in this business, along with Moody's and Fitch Ratings. As a credit rating agency, Standard & Poor's issues credit ratings for the debt of companies. As such, it is designated a Nationally Recognized Statistical Rating Organization by the U.S. Securities and Exchange Commission. It issues both short-term and long-term credit ratings. Also compiles the S&P 500.
181
Statistical discrimination
The practice of making judgments about the quality of people, goods, or services based on the characteristics of the groups to which they belong.
182
Stock (or equity)
A claim to partial ownership of a firm.
183
Stock of FDI?"
total value of FDI at a given point in time
184
store of value
the ability to hold value over time (a function of money), also known as purchasing power
185
Strategic Behavior theory?
In the case of oligopolistic industries, the theory is that if one firm engages in FDI in another country (region), then others should follow.
186
STRATEGIC TRADE POLICY (also known as (aka) industrial policy?
Policies that make an effort to achieve national competitive advantage, and through this world dominance in this industry, through first mover advantages.
187
STRATEGIC(NEW) TRADE THEORY?
Paul Krugman
many industries where the world market can only support a certain number of firms. Firms which enter the industry at the beginning, capture:
first mover advantages to achieve: economies of scale and scope, benefit from learning curve effects. Firms develop a competitive advantage over any potential rivals. This creates barriers to entry for other prospective firms.
188
Structural policy
Government policies aimed at changing the underlying structure, or institutions, of the nation's economy.
189
Structural Unemployment
Unemployment due to a mismatch between workers' skills and firms' needs.
190
subsidies?
Government payments to domestic producers. They take the form of cash grants, low interest loans, tax breaks, and government equity participation
191
Subsidy
Payment reducing the buyer's price below the seller's price
192
Substitutes
Two goods are substitutes if an increase in the price of one makes consumers more willing to buy the other.
193
Substitution effect
The change in the quantity demanded of a good that results because buyers switch to or from substitutes when the price of the good changes.
194
Sunk cost
A cost that is beyond recovery at the moment a decision must be made.
195
Supplemental Security Income (SSI)
A federal program that pays benefits, based on need, to the elderly, blind and disabled.
196
Supply
A schedule of quanitites a seller is willing to sell per unit of tiome at various prices, other things constant.
197
Supply and Demand?
It is a model of how a market behaves that is useful for understanding COMPETITIVE markets.
198
supply-side economics
the suggestion that creating incentives for individuals and firms to increase productivity will cause the aggregate supply curve to shift outward
199
surplus
The situation that results when the quantity supplied of a product exceeds the quantity demanded. Generally happens because the price of the product is above the market equilibrium price.
200
sweep acount
a despository institutions account that entails regular shifts of funds from transactions deposits that are subject to reserve requirements to savings deposits that are exempt from reserve requirements
201
T/F: It is impossible to change just one price
TRUE
202
Takeover
The purchase of one firm by a shell firm that then takes direct control of all the putchased firm's operations.
203
Target inflation rate
The Fed's long-run goal for inflation.
204
Target real interest rate
The Fed's long-run goal for the real interest rate.
205
Tariff
an excise tax on an imported (internationally traded) good.
206
Tax Incentive Program
A progrma using a tax to create incentives for individuals to structure their activites in a way that is consistent with the desired ends.
207
Taxes
Compulsory payments to governments by households and businesses.
208
Technological Agglomeration
The tendency of technological advances to spawn further technological advances, creating a concentration of new technologies in a specific location.
209
term of most bonds?
1 to 30 years. Under 1 year, they are usually referred to as money market instruments.
210
The "Real Cost" of something is ......
The "Real Cost" of something is what you must give up to get it.
211
The ______ was created to arbitrate trade disputes and monitor the trade policies of member countries as a result of the Uruguay Round agreement.
World Trade Organization
212
The _______ is a theory of foreign direct investment that combines two other perspectives into a single holistic explanation of FDI.
eclectic paradigm promoted by John Dunning... focused on location specific advantages.
213
The __________ of foreign direct investment refers to the amount of FDI undertaken over a given period (normally a year). The __________ of foreign direct investment refers to the total accumulated value of foreign-owned assets at any time.
flow, stock
214
The classical dichotomy
holds that the `real' and `monetary' sides of
| the economy can be analyzed separately
215
The conditions governing how companies are created, organized, and managed and he nature of domestic rivalry is referred to as
demand conditions.
216
The consumer price index, or CPI
Measures the cost of living by evaluating the cost of g & s.
217
the correct opportunity cost of holding money is
nominal interest rate i
218
The establishment of a wholly new operation in a foreign country is referred to as a(n):
green-field investment.
219
The foreign direct investment by non-U.S. firms was motivated primarily by the following two factors:
the desire to disperse production activities to optimal locations; and the desire to build a direct presence in major foreign markets
220
The Formula for Price Elasticity of Demand
% Change in Quantity Demanded/
| % Change in Price
221
The Hecksher-Olin theory argues that the pattern of international trade is determined by differences in:
productivity
222
the higher the interest rate available . . .
the less money people will
| want to hold
223
The Long-run price elasticity of demand is often larger or smaller (in absolute value) than the short-run elasticity?
LARGER!
224
The main gains from subsidies accrue to __________, whose international competitiveness is increased as a result of them.
domestic producers
225
The main tasks of the Federal Reserve are:
Supervise and regulate banks, Implement monetary policy by open market operations, setting the discount rate, and setting the reserve ratio, Maintain a strong payments system. Control the amount of currency that is made and destroyed on a day to day basis (in conjunction with the Mint and Bureau of Engraving and Printing). Other tasks include: economic research, economic education, community outreach.
226
The market rewards ______
SCARCITY
227
The most common marketing research technique in developing nations is still:
a combination of cluster analysis and multiple regression analysis.
228
The most global of markets are not markets for __________, where national differences in tastes and preferences are still often important enough to act as a break on globalization.
consumer goods
229
the net export effect of contractionary monetary policy
contractionary moneytary policy causes interest rates to rise (induces international inflows of financial capital-->raising the internation value of the dollar and making U.S. goods less attractive abroad)
230
The new trade theorists argue that the United States leads in exports of commercial jet aircraft not because it is better endowed with the factors of production required to manufacture aircraft, but because:
one of the first movers in the industry were U.S. firms
231
The quantity equation
```
MV=PY
M is the amount of money in the economy
V is the velocity of money
P is the aggregate price level
Y is the real value of the goods and services traded
```
232
The trend toward a more integrated global economic system has been in place for many years is commonly referred to as:
globalization
233
The two main components of globalization are:
the globalization of markets and the globalization of production
234
The U.S. has been an attractive target for FDI for all of the following reasons except:
the lack of competition.
235
Theory of Comparative Advantage
If each nation specializes in the good in which it enjoys a comparative advantage, the production of goods in the world as a whole can increase!
236
Third Degree Price Discrimination
Practice of dividing consumers into tow or more groups with separrate demand curves and charging different prices to each group
237
Third-Party-Payer Market
A market in which the person who receives the good differs from the person paying for the good.
238
three main Globalization Drivers?
i. Declining Trade and Investment Barriers.
ii. The role of technological change
iii. Competition
239
Three problems with the CPI
The substitution bias, the introduction of new items, and quality changes.
240
thrift institutions
financial institutions that receive most of their funds from the savings of the public; they include savings banks, savings and loan associations, and credit unions
241
time deposit
a deposit in a financial institution that requires notice of intent to withdraw or must be left for an agreed period; withdrawal of funds prior to the end of the agreed period may result in a penalty
242
Time preference?
Time preference is the economist's assumption that a consumer will place a premium on enjoyment nearer in time over more remote enjoyment. A high time preference means a person wants to spend their money now and not save it, whereas a low time preference means a person might want to save their money as well. The time preference theory of interest is an attempt to explain interest through the demand for accelerated satisfaction. This is particularly important in microeconomics. The Austrian School sees time as the root of uncertainty within economics.
243
Time value of money
The fact that a given dollar amount today is equivalent to a larger dollar amount in the future, because the money can be invested in an interest-bearing account in the meantime.
244
Tit-for-tat
A strategy for the repeated prisoner's dilemma in which players cooperate on the first move, then mimic their partner's last move on each successive move.
245
Total Consumer Surplus
Sum of all the individual consumer surpluses is called the total consumer surplus.
246
Total Cost
All costs associated with producing a good of service; the sum of fixed costs plus variable costs.
247
Total economic surplus
The sum of all the individual economic surpluses gained by buyers and sellers who participate in the market.
248
Total expenditure
The dollar amount consumers spend on a product.
249
Total expenditure = Total revenue
The dollar amount consumers spend on a product is equal to the dollar amount sellers receive.
250
Total Labor Force
The sum of employed workers and unemployed job searchers.
251
Total revenue
All money received from selling a good or service; the price times the quantity sold of each item.
252
Total Surplus
The sum of the consumer and producer surplus is the total surplus.
253
Trade
Voluntary exchange of goods and services for money or other goods and
254
Trade adjustment Assistance Programs
Programs designed to compensate losers for reductions in trade restrictions.
255
Trade balance (or net exports)
The value of a country's exports less the value of its imports in a particular period (quarter or year).
256
Trade deficit
When imports exceed exports, the difference between the value of a country's imports and the value of its exports in a given period.
257
Trade surplus
When exports exceed imports, the difference between the value of a country's exports and the value of its imports in a given period.
258
Traditional Economy
An economy in which customs and habits from the past are used to resolve most economic issues of production and distribution.
259
Tragedy of the commons
The tendency for a resource that has no price to be used until its marginal benefit falls to zero.
260
transaction deposits
checkable and debitable account balances in commercial banks and other types of financial institutions, such as credit unions and savings banks; any accounts in financial institutions from which you can easily transmit debit-card and check payments without many restrictions
261
transactions approach
a method of measuring the money supply by looking at money as a medium of exchange
262
transactions demand
holding money as a medium of excahnge to make payments (the level varies directly with nominal GDP)
263
Transfer payments
Payments the government makes to the public for which it receives no current goods or services in return.
264
Transnational Corporation?
is a firm that strives to be Global and Multi-domestic! ie: It must strive to achieve economies of scale whilst locally responsive.
265
traveler's check
financial instruments obtained from a bank or a nonbanking organization and signed during purchase that can be used as cash upon a second signature by the purchaser
266
Treasury
The government agency that prints, mints, and stores money.
267
Trough
The end of a recession; the low point of economic activity prior to a recovery.
268
two primary ways tha government intervenes in international trade?
Tarrif and Non-Tarrif Barriers
269
Two types of "Absolute Advantages?"
NATURAL ADVANTAGE (climate, resource availability, eg: abundant labor)
ADVANTAGE (technology or developed skills eg: training).
270
Two-part tariff
Form of pricining in which consumers are charged both an entry and a usage fee.
271
Tying
Practice of requiring a customer to purchase on good in order to purchase another
272
Unattainable point
Any combination of goods that cannot be produced using currently available resources.
273
Undervalued exchange rate
An exchange rate that has an officially fixed value less than its fundamental value.
274
Unemployment
Unemployment exists when people who want to work in jobs they are qualified to do at current wage rates are not able to find jobs, or are waiting to begin a new job, or are actively looking for work but do not have the skills required to fill the jobs that are currently available.
275
Unemployment Rate
The percentage of the labor force that is unemployed.
276
Unemployment spell
A period during which an individual is continuously unemployed.
277
Unexpected Inflation
Inflation that economists and consumers do not expect.
278
Union Shop
A firm in which all workers must join the union.
279
Unions
Workers' associations that bargain with employers over wages, benefits
and working conditions
280
Unit elastic
The demand for a good is unit elastic with respect to price if its price elasticity of demand is equal to 1.
281
Unit of Account
Something that is used universally in the description of money matters such as prices. The unit of account most commonly used in the US is the dollar.
282
unit of accounting
way of placing a specific price on economic goods and services (it serves as a standard of value (yardstick) that allows people to compare the relative worth of various goods and services)
283
Unsecured Debt
Debt without collateral; credit card debt, for example.
284
User cost of capital
The annual cost of owning and using a capital asset, equal to economic depreciation plus forgone interest
285
Utilitarianism
A moral theory in which the right course of action is the one that results in the highest total utility.
286
Utility
An abstract measure of the satisfaction consumers derive from consuming goods, services, and leisure activities.
287
Value Added
The increase in value that a firm contributes to a product or service.
288
Value of marginal product of labor (VMP)
The dollar value of the additional output a firm gets by employing one additional unit of labor.
289
Variable
A quantity that is free to take a range of different values.
290
Variable Cost
Cost that change as output changes.
291
Variable factor of production
An input whose quantity can be altered in the short run.
292
Variable profit
Sum of prifts on each increamental unit produced by a firm
293
Velocity
The speed with which a dollar bill changes hands. The higher the velocity of money, the quicker that a given piece of currency will be traded for goods and services.
294
VER's and VEA's?
Voluntary export restraints (VER’S) and voluntary export agreements (VEA'S).
295
Vertical FDI?"
choosing to invest in economic activity upstream (Backward Vertical FDI), or Downstream (Forward Vertical FDI) from the core business activity of the business unit.
296
Vertical intercept
The value taken by the dependent variable when the independent variable equals zero.
297
Vertical Merger
A combination of two companies that are involved in different phases of producing a product.
298
Vickrey Auction
A sealed-bid auction where the highest bidder wins pays the price bid by the next-highest bidder.
299
Wage
Payments for labor services that are directly tied to time worked, or to the number of units of output produced.
300
Wealth
The value of assets minus liabilities.
301
Wealth Accounts
A balance sheet of an economy's stock of assets and liabilities.
302
Wealth effect
The tendency of changes in asset prices to affect households’ wealth and thus their spending on consumer goods.
303
What accounting system did merchants of Venice in the late 1400s use?
Double entry bookkeeping.
304
What are two primary objectives of government intervention in international trade?
1. To help domestic firms achieve first mover advantages.
| 2. Help domestic firms compete against firms who have first mover advantages.
305
What currency does OPEC price oil in?
US Dollars. This is one factor that helps keep the US dollar as a major reserve currency for many nations.
306
What does fiscal policy deal with?
Tax rates and federal job creation.
307
what does it mean by capital intensive?
Is a country relying on machinery, rather than labor.
308
What does monetary policy deal with?
The base interest rate.
309
What does NAFTA stand for?
North American Free Trade Agreement
310
What happens if the fed interest rate goes too high?
Unemployment and low economic growth.
311
What happens if the fed interest rate goes too low?
Inflation.
312
What important policy implications evolve from an understanding of Porter's Diamond of National Advantage?
it is in the best interest of a firm to upgrade its advanced factors of production: eg: employee training and R & D. Equally, firms should lobby the government to urge them to increase investment in education, infrastructure, and R & D, and to promote strong competition in domestic markets.
313
What is the effect of a "Protectionist policy" on the global economy?
Protectionism is often shortsighted and fails in the long run.
314
What is the effect of a leftward shift in the demand curve?
Equilibrium price and equilibrium quantity both fall.
315
What is the effect of a leftward shift in the supply curve?
Equilibrium price rises and the equilibrium quantity falls.
316
What is the effect of a price ceiling that is ABOVE the equlibirum?
None
317
What is the effect of a rightward shift in the demand curve?
Equilibrium price and equilibrium quantity both rise.
318
What is the effect of a rightward shift on the supply curve?
Equilibrium price falls and the equilibrium quantity rises.
319
What is the largest denomination of US money ever created?
100,000 in 1934.
320
What is the life span for a US treasury note?
Commonly used bills such as the 1,5,10, and 20 dollar bills last about 2 years. For the 2, 50 and 100, it can be over 4 years.
321
What is the relationship between a nation's capital and current accounts?
Inverse if a neutral balance of payments is to be obtained.
322
What is the relationship between the yield and the price of a bond?
They are inverse.
323
What is the total cumulative value of foreign investments is referred to as?
stock of foreign direct investments
324
What kind of enterprise is any business that has productive activities in two or more countries?
multinational
325
What makes up a nation's Balance of Payments?
The current, capital, and reserve accounts.
326
What options do corporations have for raising capital?
Generally speaking, companies have three choices when they want to raise cash. They can issue shares of stock, they can borrow from the bank, or they can borrow from investors by issuing bonds.
327
What publishes the CPI every month?
The Bureau of Labor Statistics
328
What school of economic thought did Ludwig von Mises and Friedrich Hayek belong to?
The austrian school (free markets).
329
What tend to be the riskiest type of bonds?
Corporate bonds.
330
What theory deals with economies of scale?
New Trade Theory: The idea that obtaining economies of scale through first-mover advantage is what gives companies a competative advantage in the global economy.
331
What theory did Heckscher and Ohlin promote?
They argued that comparitive advantage comes primarily from factor endowments rather than productivity.
332
What theory did Leontief promote?
Leontief Paradox: Leontief performed empirical tests on the "factor endowment" idea and found that it does not predict real world scenarios.
333
What theory did Micheal Porter promote?
National Competative Advantage (Porter's Diamond): Combination of the following give competative advantage in the Global Economy:
1. Factor Endowments
2. Demand Conditions
3. Relating and Supporting Industries
4. Firm Strategy, structure, and rivalry.
334
What theory did Raymond Vernon promote?
The product life-cycle theory: the idea that products are intially produced in countries with a supporting market size. Then the are filtered down to the developing world after time as costs increase in the originating country.
335
What trade theory did Adam Smith promote?
Absolute advantage: A country has an absolute advantage in the production of a product when it is more efficient than other countries.
336
What trade theory did David Ricardo promote?
Comparitive Advantage: The theory that countries can specialize in the production of goods in which they are more efficient.
337
What would shift the supply curve?
Changes in input prices
| Changes in technology
338
When is a price ELASTIC?
If the quantity demanded is VERY RESPONSIVE to the price, the demand is considered ELASTIC.
339
When is a price INELASTIC
IF the quantity demanded is not very responsive to the price, demand is considered INELASTIC.
340
When is an economy efficient
When there is no way to make some people better off than by making other people worse off.
341
When there is a shortage, consumers will bid ______ the price.
When there is a shortage, consumers will bid UP the price.
342
When there is a surplus, producers will _______ the price.
When there is a surplus, producers will CUT the price.
343
Where should firms locate their various production facilities?
where they can be performed most efficiently
344
Which of the following two statements accurately reflects the trend in foreign direct investments over the past 20 years?
There has been a rapid increase in the total volume of FDI undertaken and there has been a change in the importance of various countries as sources for FDI
345
Which of the following two theories justify some limited and selective government intervention to support the development of certain export-oriented industries?
The new trade theory and theory of national competitive advantage
346
Who is most affected by per unit taxes?
The cost of per unit taxes is split between the buyer and the seller.
347
Who is most affected by per unit taxes?
The cost of per unit taxes is split between the buyer and the seller.
348
Who is on the $1 bill?
Washington.
349
Who is on the $10 bill?
Alexander Hamilton.
350
Who is on the $100 bill?
Benjamin Franklin.
351
Who is on the $2 bill?
Thomas Jefferson.
352
Who is on the $20 bill?
Andrew Jackson.
353
Who is on the $5 bill?
Lincoln.
354
Who is on the $50 bill?
Ulysses S. Grant .
355
Who pays for ratings of the credit worthiness of countries?
The country being rated.
356
Why is it important to understand economic theory?
It will help you to make the most informed decisions possible on every economic issue you will face.
357
Why is the price elasticity of demand almost always a negative number?
Because the law of demand says that the demand curves slope downward.
358
Why is the production possibilities frontier curved outward?
Based on the assumption that the opportunity cost changes as the mix of output changes.
359
Why would a company in the US change from labor intensive processes to capital-intensive processes?
A company would chose a labor intensive if it is less expensive than capital intensive processes (machines). This happens in society where there is tons of labor.
360
Will total revenue rise or fall when the price increases?
We can only tell if we know the price elasticity of demand.
361
WILLINGNESS TO BUY
The maximum price at which he or she would buy a good
362
Winner-take-all labor market
One in which small differences in human capital translate into large differences in pay.
363
Worker mobility
The movement of workers between jobs, firms, and industries.
364
Workers' compensation
A government insurance system that provides benefits to workers who are injured on the job.
365
World price
The price at which a good or service is traded on international markets.
366
World Trade Organization (WTO)
Organizatin committed to getting countries to agree not to impose new tariffs or other trade restrictions except under certain limited conditions.
367
WOS?
wholly owned subsidiary
368
WTO?
Responsible primarily for the administration of GATT rules.+
369
Yield Curve
A curve that shows the relationship between interest rates and bonds' time to maturity.
370
yield curve?
In finance, the yield curve is the relation between the interest rate (or cost of borrowing) and the maturity of the debt for a given borrower in a given currency. For example, the current U.S. dollar interest rates paid on U.S. Treasury securities for various maturities are closely watched by many traders.
371
Zero Economic Profit
A frim is earning a normal return on its investment i.e. it is doing as well as it could by investing its money elsewhere
372
zero sum game?
Merchantilism is a zero sum game... a situation where economic gain by one country leads to loss by another.
373
zero-coupn bond?
A bond that sells at an ititial discount, instead of paying out interest twice a year. A T-bill is an example.
374
"Let one hundred flowers bloom"
Chairman Mao Zedong's "Let a hundred flowers bloom; let a hundred schools of thought contend". This slogan was used during the period of approximately six weeks in the summer of 1957 when the Chinese intelligentsia were invited to criticize the political system then obtaining in Communist China.
It is sometimes suggested that the initiative was a deliberate attempt to flush out dissidents by encouraging them to show themselves as critical of the regime. Whether or not it was a deliberate trap isn't clear but it is the case that many of those who put forward views that were unwelcome to Mao were executed.
375
absolute majority
more than 50% of all votes cast
376
accountability
the concept that government officials are responsible to and serve at the pleasure of constituents or elected officials (and that they may be removed from office by those electors or officials)
377
adjudicate
to resolve a matter in dispute; when backed up by the authority of government the decision can be enforced
378
adjudication
the legal process of deciding an issue through the courts
379
Afghanistan and Bhutan
British buffer states for India
380
Agreement Establishing the World Trade Organization (Marrakesh Agreement)
The World Trade Organization (WTO) was formed in 1994 following the Uruguay Round of trade negotiations to encompass the existing General Agreement on Tariffs and Trade (GATT) in an institutional framework, enhance its provisions and provide for a binding dispute resolution mechanism. The WTO, with approximately 150 members, is the principal multilateral forum for addressing international trade issues.
381
agricultural sector
that part of a country's economy that is involved in the production of farm products
382
airspace
The space above a state that is considered its territory, in contrast to outer space, which is considered international territory.
383
alliance cohesion
the ease with which the members hold together an alliance; tends to be high when national interests converge & when cooperation among allies become institutionalized
384
Alliance for Progress
1961 - International development program. Initiated by the U.S. and joined by 22 Latin American countries in 1961, it aimed to strengthen democratic government and promote social and economic reforms in Latin America. The program, which provided loans and aid from the U.S. and the international financial community, built some schools and hospitals, but by the early 1970s it was widely viewed as a failure. Significant land reform was not achieved, population growth outstripped gains in health and welfare, and the U.S. willingness to support military dictators to prevent communism from gaining a foothold sowed distrust and undermined the reforms the Alliance was intended to promote.
385
Ambalat
Indonesia & Malaysia dispute this oil-rich sea area
386
America First
Founded in 1939 after Germany’s invasion of Poland, America First was an isolationist group that opposed U.S. involvement in World War II. Many prominent Americans were members, including aviator Charles Lindbergh. At its peak, America First had 800,000 members. The organization disbanded shortly after the bombing of Pearl Harbor.
387
American Convention on Human Rights
The American Convention on Human Rights, which entered into force in 1978, defines the human rights that the ratifying states of the Western Hemisphere have agreed to foster through the Inter-American Commission on Human Rights (IACHR), an autonomous organ of the Organization of American States (OAS) headquartered in Washington, D.C. The IACHR meets frequently, considers cases brought before it and gives priority to stimulating public awareness in such areas as judicial independence, activities of irregular armed groups and the human rights of minors, women and indigenous peoples. The Convention also established the Inter-American Court of Human Rights, located in San Jose, Costa Rica.
388
Amnesty International
An influential non-governmental organization that operates globally to monitor and try to rectify glaring abuses of political (not economic or social) human rights.
389
anarchy
In IR theory, the term implies not complete chaos but a lack of a central government that can enforce rules.
390
Andrei Gromyko
Soviet foreign minister (1957–85) and president (1985–88) of the Presidium of the Supreme Soviet. Though never strongly identified with any political faction, he served dependably as a skilled emissary and spokesman. He was ambassador to the U.S. (1943–46), Soviet representative to the UN Security Council (1946–48), and ambassador to Britain (1952–53). In 1957 he began his long tenure as foreign minister and became renowned for his negotiating skills. In 1985 he was promoted to the presidency, with great prestige but little power, after Mikhail Gorbachev came to power.
391
Anglo-French Condominium of the New Hebrides
1906: Joint agreement between England and France for cooperative government in the Pacific
392
Annexation of Baltic States
1940 - The direct Soviet aggression against the Baltic countries occurred on 14-17 June 1940 when the world’s attention was focused on the military actions in Western Europe where Paris fell to the Germans on 14 June. Accusing Estonia of forming a conspiracy together with Latvia and Lithuania against the Soviet Union, the latter presented an ultimatum, demanding new concessions which included allowing more troops to enter the three countries. In the conditions of international isolation, the governments surrendered without offering any military resistance, and within a few days, the countries were invaded and occupied by several hundred thousand soldiers of the Red Army. A few days later days, led by Stalin’s close associates, the local communist supporters and those brought in from Russia, formally forced the Baltic governments to resign and proclaimed new "people's governments" in the three occupied countries.
393
Are the majority of muslims sunni or shiite?
About 90% are sunni. Shiites live mainly in Iran and Iraq.
394
arms race
reciprocal process in which two or more states build up military capabilities in response to each other
395
attentive public
the minority of the population that stays informed about international issues
396
Austrian State Treaty
1955 - 1955 in Vienna at the Schloss Belvedere among the Allied occupying powers: France, the United Kingdom, the United States and the Soviet Union, and the Austrian government and officially came into force on July 27, 1955.
397
autarchy
complete self-sufficiency
398
authoritarianism
a political system in which a small group of individuals exercises power over the state without being constitutionally responsible to the public.
399
autocracy
a system of governance in which a small group has absolute power
400
autonomy
the degree to which a state can implement policies independent of the populace or the amount of sovereignty a nation-state can exercise in the global environment
401
Azerbaijan & Armenia
Azerbaijan holds Naxcivan in Armenia and Armenia holds Nagorno-Karabakh region in Azerbaijan
402
Bahrain vs. Qatar
Dispute over the Hawar Islands
403
balance of power
The general concept of one or more states’ power being used to balance that of another state or group of states. The term can refer to (1) any ratio of power capabilities between states or alliances, (2) a relatively equal ratio, or (3) the process by which counterbalancing coalitions have repeatedly formed to prevent one state from conquering an entire region.
404
balance of trade
comparison between the value of exports and the value of imports for a nation-state; usually figured by subtracting the value of imports from the value of exports (positive means that exports were worth more than imports; negative means that the value of imports exceeded the value of exports)
405
Balfour Declaration
A formal statement of policy by the British government in 1917 stating, among other things, that the Jewish plans for a national home for their people within Palestine‎ was supported by the Britain. So -- Jews thought they had the right to live there, Palestinians were already there and thought they had the right to stay. Conflict starts here.
406
Balkan independence
Croatia first, then Serbia. Bosnia in 1992 from Yugoslavia. Kosovo last.
407
bandwagoning
smaller states join forces with larger states to gain power
408
Battle of Britain
June 1940–April 1941: Series of intense raids directed against Britain by the German air force in World War II. The air attacks, intended to prepare the way for a German invasion, were directed against British ports and RAF bases. In September 1940 the attacks turned to London and other cities in a “blitz†of bombings for 57 consecutive nights, which was followed by intermittent raids until April 1941. The RAF was outnumbered but succeeded in blocking the German air force through superior tactics, advanced air defenses, and the penetration of German secret codes.
409
Belleau Wood
A forested area of northern France. In June 1918, it was the site of a hard-fought and bloody American victory over the Germans. This battle was signicant in that it stopped a German advance toward Paris
410
Berlin Blockade
1948-1949 – Instituted by the Soviet Union in the hope that the Allies would be forced to abandon West Berlin. The Berlin Airlift, a massive effort to supply the 2 million West Berliners with food and fuel for heating began in June, 1948, and lasted until Sept., 1949, although the Russians lifted the blockade in May of that year. During the around-the-clock airlift some 277,000 flights were made delivering an average of 8,000 tons of supplies daily.
411
bicameral
describing a legislative body with two houses
412
Biological Weapons Convention
Entered into force in 1975, the Biological Weapons Convention (BWC) had 151 member states in 2006. It provides that members of the Convention should “never in any circumstances…develop, produce, stockpile or otherwise acquire or retain…Microbial or other biological agents, or toxins whatever their origin or method of production, of types and in quantities that have no justification for prophylactic, protective or other peaceful purposes.” The Convention also imparts responsibilities on member nations to destroy all such weapons and their means of delivery.
413
Bipolarity
A balance of power system involving two power centers. Example: The US and The Soviet Union post WWII
414
blue helmets
The UN peacekeeping forces, so called because they wear helmets or berets in the UN color, blue, with UN insignia.
415
Border distinctions
Delimited borders are described; demarcated borders are surveyed and marked.
416
Bretton Woods Agreement
1944 agreement made in Bretton Woods, New Hampshire, which helped to establish a fixed exchange rate in terms of gold for major currencies. The International Monetary Fund was also established at this time.
417
Britain, China, Iran
Which of the states we have studied are unitary governments.
418
Bryan resigns
June 9, 1915 – Believing the strong language in Wilson’s note to Germany after the sinking of the British ship Lusitania would lead the U.S. into an unnecessary war; Secretary of State William Jennings Bryan resigned his post.
419
budgetary deficit
the result of government spending in any one fiscal year exceeding the government revenue in that year (national debt is the total of yearly deficits)
420
burden sharing
The distribution of the costs of an alliance among members; the term also refers to the conflicts that may arise over such distribution.
421
bureaucracy
a hierarchically structured organization charged with carrying out the policies determined by those with political authority
422
bureaucratic authoritarianism
A system in which the state bureaucracy and the military share a belief that a technocratic leadership, focused on rational, objective, and technical expertise, can solve the problems of the country without public participation.
423
Bystroe Canal & Serpent Island
Disputed by Romania and Ukraine. ICJ split Serpent Island in 2009. **Mouth of the Danube at issue**
424
cabinet
in a parliamentary system, the group of ministers who direct administrative bureaucracies (ministries) and make up the government, which is responsible to the parliament; in a presidential system, the administrative directors responsible to the president
425
Cameroon vs. Nigeria
Conflict over the Bakasi Peninsula; the ICJ ruled in favor of Cameroon.
426
Camp David Accords
1979 peace agreement between Israel and Egypt
427
Cantigny
1918 – A village of northern France south of Amiens. It was the site of the first major U.S. offensive in World War I on May 28 1918.
428
capacity
the degree to which a government or state is able to implement its policies
429
capitalism
A system of production based on private property and free markets.
430
carrying capacity
The number of people that an environment, such as the Earth, can feed, provide water for, and otherwise sustain
431
cartel
An international agreement among producers of a commodity that attempts to control the production and pricing of that commodity.
432
Caspian Sea Access
There are crucial gas pipelines from Uzbekistan in this area. The Caspian is the most successful example of the UN Law of the Sea
433
catch-all party
a political party whose aim is ot gather support from a broad range of citizens through a de-emphasis of ideology and an emphasis on pragmatism, charismatic leadership, and marketing
434
causation
a correlation in which a change in one variable results in a change in others
435
CENTO
1955 - Central Treaty Organization: Mutual-security organization, originally composed of Turkey, Iran, Iraq, Pakistan, and Britain. It was formed in 1955, at the urging of the U.S. and Britain, to counter the threat of Soviet expansion into the Middle East. CENTO was never very effective. Iraq withdrew after its anti-Soviet monarchy was overthrown in 1959. In that same year the U.S. became an associate member, and CENTO's headquarters were moved to Ankara, Tur. After the fall of Mohammad Reza Shah Pahlavi in 1979, Iran withdrew and CENTO was dissolved.
436
central planning
A communist economic system in which the state explicitly allocates resources by planning what should be produced and in what amounts, the final prices of goods, and where they should be sold.
437
centrifugal forces
forces that divide and fragment societies
438
centripetal forces
forces that pull societies closer together
439
Ceuta
Spanish city on the tip of Morocco. Illegal immigration is an issue here.
440
charismatic legitimacy
Legitimacy built on the force of ideas embodied by an individual leader.
441
Chechnya
Separatist movement from Russia; terrorist acts by Chechens have spurred Russian intervention. Oil in the area exacerbates it.
442
checks and balances
a system of governance in which divisions of government can restrain the political authority of other divisions
443
Chemical Weapons Convention
The Chemical Weapons Convention entered into force in 1997. The Convention prohibits all development, production, acquisition, stockpiling, transfer and use of chemical weapons. It imposes reporting requirements, as well as inspections on chemical weapons sites located inside participating states. In 2006, 179 states were parties to the Convention. The Organization for the Prevention of Chemical Weapons was created by the United Nations to provide oversight for the compliance of participants.
444
citizen
a member of a state who is legally entitled to full civil rights and is legally obliged to perform defined public duties
445
CITs
Countries in transition - a nation that is in a state of transition, whether it be social, economic, political or otherwise. Transitions can be very different in nature. Ex) Bolshevik revolution, American revolution, Chinese Revolution.
446
civic culture
a political culture in which citizens widely share a belief in the legitimacy of their regime and a trust in the government; therefore the citizens demonstrate restraint in their demands on the government
447
civil servants
employees of the government who administer (not make) policy; expected to serve any and all governments
448
civil service
a system of carefully describing the tasks involved in performing government jobs, evaluating applicants for these jobs, and hiring people from among those applicants based on skills and experience rather than political factors; civil service also protects incumbents in civil service positions from politically based retribution
449
civil society
Organizations outside the state that help people define and advance their own interests
450
civil war
A war between factions within a state trying to create, or prevent, a new government for the entire state or some territorial part of it.
451
class
the divisions of society into groups according to economic roles and status attributes
452
Class A Mandates
Iraq, Palestine, Syria
453
Class B Mandates
Rwanda & Burundi, Tanganyika, Cameroon, Togoland
454
Class C Mandates
New Guinea, Nauru, Western Samoa, Southwest Africa
455
cleavage
factors that separate groups within a society; may be cultural, historic, geographic, economic, ethnic, racial, etc.; the wider and deeper the cleavages, the less unified the society; cleavages which coincide with one another can reinforce each other; cleavages that don't coincide can weaken the divisions between groups
456
clientism
A process whereby the state co-opts members of the public by providing specific benefits or favors to a single person or a small group in return for public support.
457
codify
to write down a law in formal language
458
coercive participation
political action organized by ruling authorities rather than by interest groups or civil society groups
459
coinciding cleavages (polarizing)
--occur when the factors composing one's social identity tend to pull in the same political direction.
460
collective goods problem
how to provide something that benefits all members of a group regardless of what each member contributes to it
461
collective responsibility
in a parliamentary system, the concept that all cabinet members agree on policy decisions and that all will be responsible for the results
462
collective security
The formation of a broad alliance of most major actors in an international system for the purpose of jointly opposing aggression by any actor; sometimes seen as presupposing the existence of a universal organization (such as the United Nations) to which both the aggressor and its opponents belong.
463
Colony
1. an ocean separates the colony from the sovereign
2. there is a racial, ethnic, or cultural difference
3. the people must have made an effort for self governent and elected the sovereign
464
COMECON
1949 - Council for Mutual Economic Assistance: Organization founded in 1949 to facilitate and coordinate the economic development of Soviet-bloc countries. Its original members were the Soviet Union, Bulgaria, Czechoslovakia, Hungary, Poland, and Romania; other members joined later, including Albania (1949) and the German Democratic Republic (1950). Its accomplishments included the organization of Eastern Europe's railroad grid, the creation of the International Bank for Economic Cooperation, and the construction of the “Friendship†oil pipeline. After the political upheavals in Eastern Europe in the late 1980s, it largely lost its purpose and power. In 1991 it was renamed the Organization for International Economic Cooperation.
465
Cominform
1947 - Agency of international communism founded under Soviet auspices in 1947. Its original members were the Communist Parties of the Soviet Union, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, Yugoslavia, France, and Italy, but Yugoslavia was expelled in 1948. The Cominform's activities consisted mainly of publishing propaganda to encourage international communist solidarity. It was dissolved by Soviet initiative in 1956 as part of a Soviet program of reconciliation with Yugoslavia.
466
command economy
an economic/political system in which government decisions rather than markets determine resource use and output
467
Communist takeover of Angola
1976 - Portugal granted Angola independence in 1975 and the MPLA assumed control of the government in Luanda; Agostinho Neto became president. The FNLA and UNITA, however, proclaimed a coaliton government in Nova Lisboa (now Huambo), but by early 1976 the MPLA had gained control of the whole country. Most of the European population fled the political and economic upheaval that followed independence, taking their investments and technical expertise with them. When Neto died in 1979, José Eduardo dos Santos succeeded him as president. In the 1970s and 80s the MPLA government received large amounts of aid from Cuba and the Soviet Union, while the United States supported first the FNLA and then UNITA
468
Communist takeover of Ethiopia
1977 - Lt. Col. Mengistu Haile Mariam became head of the PMAC, which soon diverted from its announced socialist course. A popular movement, the Ethiopian People's Revolutionary Party, began a campaign of urban guerrilla activity that was contained by government-organized urban militias in 1977. Under the Mengistu regime, thousands of political opponents were purged, property was confiscated, and defense spending was greatly increased.
469
Communist takeover of Grenada
1979 - a successful, bloodless coup established the People's Revolutionary Government (PRG) under Prime Minister Maurice Bishop. This government's Marxist leanings and favorable stance toward Cuba and the Soviet Union strained relations with the United States and other nations in the region. In Oct., 1983, after Bishop and his associates were assassinated by more hard-line radicals within his own movement, the United States, with token forces from other Caribbean nations, invaded and occupied Grenada. A general election held in Dec., 1984, reestablished democratic government, with Herbert Blaize as prime minister.
470
Communist takeover of Mozambique
1975 - In reaction to the independence agreement, a group of white rebels attempted to seize control of the Mozambique government but were quickly subdued by Portuguese and Frelimo troops. As black rule of Mozambique became a reality (with Machel as president) and as increased racial violence erupted, there was an exodus of Europeans from Mozambique. As the Portuguese left, they took their valuable skills and machinery, which had an adverse effect on the economy. Frelimo established a single-party Marxist state, nationalized all industry, and abolished private land ownership. Frelimo also instituted health and education reforms.
471
Communist takeover of Nicaragua
1981 - Nicaragua was taken over by the Sandinista party after a popular revolt. The Sandinistas were then opposed by armed insurgents, the U.S.-backed Contras, from 1981. The Sandinista government nationalized several sectors of the economy but lost national elections in 1990. The new government reprivatized many public enterprises. Sandinista leader Daniel Ortega returned to power after winning the presidential election of 2006.
472
comparative foreign policy
study of foreign policy in various states in order to discover whether similar types of societies/governments consistently have similar types of foreign policies
473
compellence
The use of force to make another actor take some action (rather than, as in deterrence, refrain from taking an action).
474
Comprehensive Test Ban Treaty
The Comprehensive Test Ban Treaty (CTBT) bans all nuclear weapons tests. Since the Treaty was opened for signature in 1996, some 170 states have become members. Seen as an important step toward reducing the proliferation of nuclear weapons capabilities and promoting progress toward the ideal of nuclear disarmament, the CTBT provides for on-site inspections and periodic reporting by participating states.
475
compromise
a decision-making (policy-making, law-making) process in which all parties concede some of their goals in order to reach other of their goals through agreements with other political actors
476
conditionality
A term that refers to the policy of the IMF, the World Bank, and some other international financial agencies to attach conditions to their loans and grants. These conditions may require recipient countries to devalue their currencies, to lift controls on prices, to cut their budgets, and to reduce barriers to trade and capital flows. Such conditions are often politically unpopular, may cause at least short-term economic pain, and are construed by critics as interference in recipient countries’ sovereignty.
477
conflict
A difference in preferred outcomes in a bargaining situation.
478
conflict and cooperation
The types of actions that states take towards each other through time.
479
conflict resolution
The development and implementation of peaceful strategies for settling conflicts.
480
conservatism
A political attitude that is skeptical of change and supports the current order.
481
constitution
a supreme law that defines the structure of a nation-state's regime and the legal processes governments must follow
482
constructivism
A movement in IR theory that examines how changing international norms help shape the content of state interests and the character of international institutions.
483
containment
a policy adopted in the late 1940s by which the US sought to halt the global expansion of Soviet influence on several levels-military, political, ideology, & economic
484
Convention Against Torture
The Convention Against Torture, which entered into force in 1987, places an absolute prohibition on the use of torture as state policy. It requires parties to “take effective legislative, administrative, judicial or other measures to prevent acts of torture in any territory under its jurisdiction” (Article 2). The Convention explicitly states that “No exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political instability or any other public emergency, may be invoked as a justification of torture,” nor can “an order from a superior officer or a public authority.” Considered a codification of the customary prohibition of torture in international law, the Convention also prohibits returning a person to a state in circumstances where he or she is likely to be tortured.
485
Convention on the Elimination of All Forms of Discrimination Against Women
The Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), which entered into force in 1981, is an "international bill of rights for women." The Convention aims to “ensure an immediate end to torture and other forms of degrading treatment and to prosecute and punish those responsible for such practices." With 176 parties as of March 2004, the Convention aims to increase political social, and economic freedoms and opportunities for women throughout the world. The Convention also has provisions against trafficking of women and requires states to take specific measures to prevent their exploitation. In 2006, the United States was one of the 185 state parties to the Convention, but it has expressed objections over provisions relating to family planning.
486
Convention on the Organization for Economic Cooperation and Development (OECD Convention)
The Organization for Economic Cooperation and Development (OECD), founded in 1961 and comprising 30 member countries, is dedicated to promoting increased economic development among its members and with 70 partner countries. It produces international agreements, standards and regulations that promote guidelines to facilitate economic development, trade and good governance. The OECD also publishes authoritative statistics and documents on macroeconomics, education, development and technology issues.
487
Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on Their Destruction (1997 Mine Ban Treaty)
The Mine Ban Treaty prohibits the production, use and transfer of antipersonnel landmines, and calls on parties to eliminate existing stockpiles and take measures to remove existing landmines from affected countries. States are also called on to raise awareness about mines and ensure that mine victims are cared for, rehabilitated and reintegrated into their communities. The Convention, entered into force in 1999, had more than 150 signatories by 2006. The United States is not a party to the Convention because of concerns about its impact on the landmines that defend South Korea from a possible attack from the North.
488
Convention on the Punishment and Prevention of Genocide
Signed in 1948, the Convention on the Punishment and Prevention of Genocide states that genocide ". . .whether committed in time of peace or in time of war, is a crime under international law which they [the signatories] undertake to prevent and to punish." The treaty defines genocide as actions ". . .committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group." Article III specifically outlines those international crimes that include genocide, such as genocide itself, conspiracy to commit genocide, direct and public incitement to commit genocide, the attempt to commit genocide and complicity in genocide.
489
Convention on the Rights of the Child
The Convention on the Rights of the Child entered into force in 1990, and is one of the primary human rights treaties. It requires States Parties to take “all appropriate measures to ensure that the child is protected against all forms of discrimination or punishment on the basis of the status, activities, expressed opinions, or beliefs of the child's parents, legal guardians, or family members.” (Article 2). The Convention protects children’s’ rights through the juvenile justice system and calls for states to adhere to policies that accord with the best interests of children. The Convention has been ratified by 192 countries. The United States is not a party to this Convention.
490
Convention Relating to the Status of Refugees
The Convention Relating to the Status of Refugees establishes the basic rights of protection for refugees who are forced to leave their country of origin out of a well-founded fear of persecution. The Convention guarantees rights to those seeking asylum and states that refugees will not be forcibly returned to their state of origin as long as the threat of persecution continues. Entered into force in 1954, the Convention had 140 parties as of 2006. Although the United States is not a state party to the Convention, it is a party to its Protocol, which incorporates all the Convention provisions subject to some limitations.
491
co-opt
to win support by granting special favors to an individual or a group; there is often an implication that those receiving benefits abandon important goals when offered less-important benefits
492
co-optation
The process by which individuals are brought into a beneficial relationship with the state, making them dependent on the states for certain rewards.
493
corporatism
A method of co-optation whereby authoritarian systems create or sanction a limited number of organizations to represent the interests of the public and restrict those not set up or approved by the state.
494
cost-benefit analysis
A calculation of the costs incurred by a possible action and the benefits it is likely to bring.
495
counterinsurgency
effort to combat guerillas, often including programs to "win the hearts & minds" of rural populations so they stop sheltering guerillas
496
coup d'etat
A move in which military forces take control of the government by force.
497
crimes against humanity
A category of legal offenses created at the Nuremberg trials after World War II to encompass genocide and other acts committed by the political and military leaders of the Third Reich (Nazi Germany).
498
critical theory
addresses how to overcome "exclusion" & seeks to understand the underlying conditions in which emancipation is possible
499
crosscutting cleavages
--occur when the various factors that make up an individual's social identity tend to pull that person in different political directions.
500
cult of personality
Promotion of the image of an authoritarian leader not merely as a political figure but as someone who embodies the spirit of the nation and possesses endowments of wisdom and strength far beyond those of the average individual.
