Unit 3/4 Review

Question 1

World Bank

Answer 1

Main Goals:
- Issue long-term fifnancial assistance in the form of loans and grants in order to
- improve education and healthcare systems
- improve infrastructure
- eliminate poverty

Question 2

Heavily-indebted Poor Country (HIPC)

Answer 2

• A country that owes a substantial debt to more developed countries, and that has little to no hope over ever repaying them
• The World Bank and IMF give debt relief, but HIPCs must
• Cut gov. spending
• Selling public assets to the private sector
• Following the principles of free market capitalism

Question 3

World Bank Supporters

Answer 3

• The number of people living in poverty in less developed countries fell by half; from 41% to 21% in the last 20 years
• Life expectancy in less-developed countries increased by 20 years
• Number of children dying before the age of 5 reduced by 50%
• Adult illiteracy halved to 25%

Question 4

World Bank Critics

Answer 4

• Criticized for pushing the free market system and assuming it will bring prosperity
• Critics argue the free market is not suitable for countries that:
• Are experiencing corrupt leadership
• Don’t have a stable, democratic political system
• Are experiencing conflict

Question 5

IMF

Answer 5

• Works together with the World Bank to brain stability to world trade
• Monitors exchange rates
• Provides short-term financial assistance

Question 6

European Union

Answer 6

The world’s largest and most powerful common market, which works to develop common foreign and security policies
and to address other issues such as citizens’ rights, job creation, regional development, and environmental protection

Question 7

Tariff

Answer 7

A tax on imported goods or services
- Meant to reduce competition with domestic goods and services
- As tariffs go up, trade goes down

Question 8

Canadian International Development Agency (CIDA)

Answer 8

Government agency responsible for
administering foreign aid programs in less developed countries

Question 9

Nationalize

Answer 9

The taking over of ownership by a
government from private business

Question 10

IMF Strutural Adjustment Program

Answer 10

• To qualify for IMF loans, countries must commit to reforms. They must:
• Open its borders to trade
• Cut public spending
• Increase taxes
• Sell its government owned property to private citizens or corporations
• Pay interest on the loan

Question 11

Floating Exchange Rate

Answer 11

• The exchange rate of a country’s currency is not fixed by government but finds its value on the foreign exchange market

Question 12

IMF Supporters

Answer 12

Transparency - The IMF assesses each country’s economic system manually and publishes their findings in the World Economic Outlook and Global FInanacial Stability Report

Financial Assistancce - The IMF offers funds and loans to member countries to address debt problems and reduce poverty

Question 13

IMF Critics

Answer 13

• Say the IMF often advocates austerity problems (cutting crucial social programs)
• Claim the IMF fails to actively promote democracy and human rights. Instead, they argue that the IMF often supports corrupt military dictatorships and that these dictators are actually given loans to support their regime as those dictatorships are “friendly” with American corporations
• Argue the IMF is controlled by the U.S. and other Western countries

Question 14

Free Market Economy

Answer 14

A system in which government does not intervene (or intervenes only minimally) in the production and control of
goods and services

Question 15

Deregulation

Answer 15

Opening an industry to more competition by removing government regulations

Question 16

G8/G7

Answer 16

• Informal group of 7/8 major industrial democracies
• Meet at annual summits to discuss economic and foreign policies

Question 17

Quotas

Answer 17

Proportional shares, such as those paid by member countries of the International Monetary Fund

Question 18

John Maynard Keynes

Answer 18

• Believed the government should play a large role in regulating the economy
• Argued that falling wages resulted in decreased spending
• Believed that during a recession, governments needs to increase funding and decrease taxes to promote consumer spending

Question 19

Friedrich Hayek

Answer 19

• Believed that when governments try to control society, those societies were doomed for failure
• His theories were based off the analysis of dictatorships
• Opposite of John Maynard Keynes
• Proposed reduceing government spending, taxes, government regulation, power of trade unions, privatizing government-owned industries, and cutting back on welfare

Question 20

Milton Friedman

Answer 20

• Government intervention should be limited
• People should pursue individual self0interest
• Free trade should be encouraged, the economy should adhere to free market principles
• Government should slowly and steadily increase the money supply to grow the economy

Question 21

NAFTA

Answer 21

Treaty among Canada, the United States,
and Mexico to improve trade by removing
tariffs and other economic barriers

Question 22

Economic Nationalism

Answer 22

Concern about the impact of
foreign investment on a country’s economic
independence and identity

Question 23

Stewardship

Answer 23

The responsible use of the environment; the act of taking care of the natural resources around us

Question 24

Bretton Woods Agreement

Answer 24

An agreement forged after the Second World War in Bretton Woods, New Hampshire, by 44 countries to establish a system of rules, institutions, and procedures for the postwar global economy
- Created the IMF and World Bank

Question 25

Trade Bloc

Answer 25

Groups of countries in specific regions that manage and promote trade activities

Question 26

World Trade Organization(WTO)

Answer 26

• Works to improve trade relations among the countries of the world by removing tariffs and other barriers

Question 27

Knowledge Economy

Answer 27

The use of knowledge to produce economic benefits

Question 28

Trade Liberalization

Answer 28

The process of removing or reducing barriers to trade in order to make it easier to conduct trade
- Barriers include tariffs, licensing rules and quotas

Question 29

Quality of life

Answer 29

Quality of life is the patient’s own subjective view of well-being and satisfaction with her/his life.

Question 30

Gross Domestic Product Per Capita (GDP/Capita)

Answer 30

The value in US dollars of all goods produced and services provided in a country’s economy in one year, divided by the country’s average population for the same year

Question 31

Boycott

Answer 31

A consumer’s refusal to purchase goods or services from a company because of disagreement with its corporate policies

Question 32

Employment equity

Answer 32

The principle of equal pay for equal work, or for work of equal value

Question 33

Tied Aid

Answer 33

official grants or loans that limit procurement to companies in the donor country or in a small group of countries

Question 34

Citizen Advocacy

Answer 34

The name given to the committed relationship between a suitable citizen who provides long-term advocacy to a person with a disability

Question 35

Standard of living

Answer 35

A common measure of the quantity and quality of goods and services to which people have access

Question 35

Standard of living

Answer 35

A common measure of the quantity and quality of goods and services to which people have access

Question 36

Human Development Index

Answer 36

The United Nations measure of a country’s level of development based on GDP per capita, life expectancy
at birth, adult literacy, and school enrollment