Wealth Flashcards
Describe wealth
Wealth is the end result of an economic activity. There is production, distribution and consumption.
How is the wealth of a country measured?
Economic indicators.
Is the worlds wealth equally distributed? Why?
No it’s not because economic indicators show us that not every country is wealthy.
What have economists developed to measure wealth?
Economic concepts and indicators.
Which currency is normally used when calculating a country’s wealth?
The U.S. Dollar.
What does production consist of?
Creating goods and services for trade on the market.
What does distribution consist of?
All activity that takes place after production and before consumption.
What is consumption?
It is the use of a good or service by a customer, a person or a company.
What do economic indicators make possible?
To compare the wealth of countries, regions or cities and to measure their economic development.
What do the economists use purchasing-power parity (PPP) for?
To compare the cost of living from one state to another.
What is the constant dollar?
It is the common currency used to estimate the economy without taking into consideration the inflation.
What is the constant dollar useful for?
When studying the development of the economy over time.
The Big Mac Index serves what purpose?
It is a good way of comparing the cost of living in different countries. It is a PPP indicator.
What does the Gross Domestic Product (GDP) measure?
It measures the wealth created in a year, a country’s production of goods and services.
What is Annual Growth?
It refers to the annual growth of the GDP. It is calculated in constant dollars.
What does the GDP per Capita measure?
It measures the standard of living and is the average income earned by a country’s population.
What is the Gross National Income per Capita? (GNI per capita)
It is the average income earned by a country’s population.
What are imports and exports?
Imports - goods and services entering a country from another.
Exports- goods and services a country sells to other country’s.
What is purchasing power?
It is what you can do with you money.
What is inflation?
It measures the overall increase in price of goods and services for a given period.
What is the human development index (HDI) measure and how is it expressed?
It looks at income, health and level of education. It is expressed in a value of 0 to 1
Who are the Asian dragons?
South Korea, Singapore, Taiwan and Hong Kong.
Why is the balance of trade important for a states economy?
When the value of a country’s import exceeds that of its exports it is said to have a trade deficits. The opposite is called a surplus or positive balance of trade.
What phenomenon transformed international trade?
Globalization
What are the three causes that led to the economic globalization ?
Communication- means of transportation.
Multinationals- free trade zone.
Government- promotes free trade.
What are the three advantages of economic globalization?
More products and services available, cheaper prices, international labour.
What are the four disadvantages of economic globalization?
Increased competition between countries, countries are relying on other countries, difference between the developed and non developed countries, relocation of industries.
What were the trade patterns between countries or continents during the 1970s?
North America, Western Europe, Japan
What were the trade patterns between countries or continents during the 1980s?
India, Brazil, Russia, Mexico , China
What is trade deficit?
Exports value is less than your imports.
What is trade surplus?
Exports value is greater than your imports.
Explain what is meant by balance of trade and give a formula for calculating it.
Difference of the value of the countries imports and exports
Ve-Vi=B
What is the advantage of having a trade surplus?
You are accumulating foreign money.
What type of trade status to developing countries have? Explain
Trade deficit because what they are sending out is worth less than what they are bringing in.
What connection can you make between countries balance of trade and the worlds wealth?
Generally countries with a positive balance of trade tend to be wealthy and countries with a negative balance of trade tend to be developing countries.
How is the worlds wealth measured?
Economic indicators ( GDP, GNI, etc), economic growth, globalization, balance of trade.
What does it mean when a countries in debt?
Money a country owes to foreign creditors .
What are the two disadvantages of a country carrying a heavy debt?
It is insolvent when it’s amount exceeds the country’s GDP and the interest can quickly become unserviceable.
Name and explain the six forms of international Aid.
Financial supports- money is provided.
Material support- supplies needed for development are provided.
Sharing of technology-technology is transferred to less advanced countries.
Training and education- specialists are provided to share general or specialized expertise.
Participation in the construction of infrastructures- resources are provided to help
construct or repair various infrastructures.
Expert advice- knowledge and experience are shared.
Why do developing countries have a higher debt than developed countries?
They had to construct infrastructures and industries to gain independence.
What is the Gini index?
Indicator that measures inequalities in the distribution of income. 0(perfect) and 1(imperfect)
Explain what a welfare state is
Countries whose public administration favours the development of social policies, putting into use measures aimed at reducing inequalities between citizens.
Name the 4 categories of social policies used by states.
Redistribution, regulation, capacity building, protection of human dignity.
What is redistribution and give an example
The measures taken to reduce disparity in the distribution of wealth between individuals.
An example is income tax
What is regulation and give an example
To defend the weak and to prevent abuse, states can control various activities in the form of law.
An example is labour laws
What is capacity building and give an example
Certain state actions aim at creating more equal opportunities for individuals in an effort to make each one capable of taking charge of their own life.
An example is the development of health and education system
What is protection of human dignity and give an example.
States are in position to protect the dignity of their citizens by taking action to defend and promote human rights.
An example is organize public awareness such as gender equality
Explain what fair trade is
The model based on free trade and the permanent ending of trade barriers. It’s a protection.
What are the objectives of fair trade?
Protagonist of fair trade hope to transform international trade. They would like to see fairer trade
Give and explain 4 types of actions taken by NGOs to help reduce the disparity of wealth in the world
Information, protest and mobilization campaigns-it informs the public about the situation in developing countries(petitions,forms)
Informing the public authorities- pressuring governments or international organizations to get involved in the causes defended by the NGOs
Fundraising-allows NGOs to acquire financing, to provide humanitarian aid in emergency situations
Projects- they provide direct aid to needy populations
Explain the difference between emergency aid and development aid
Emergency aid is a temporary action aimed at providing immediate help for populations facing problems.
development aid is intended to solve problems in a sustainable fashion by dealing with their basic and sometimes highly complex causes.
What is a debt burden?
The debt of a country, when large enough that servicing it has become difficult.
What is decolonization?
A country that was previously controlled by another has become independent.
What is neo colonialism?
The use of economic, political, culture, or other pressures to control or influence other countries.
What is globalization?
The exchange of goods and services on a global
Scale. It also refers to the interdependence of countries in all areas
Who are the Asian tigers?
Thailand, Indonesia , Malaysia and the Philippines.
What was led to the economic growth of the Asian dragons and tigers?
Close to Japan, coastal location, cheap labour, during the Cold War they were on Japan’s side who was with the USA.
What is economic growth?
It is An increase in production volume .
Name the countries with emerging economies.
India, China, Brazil, Asian dragons and Asian tigers.
What are the characteristics with emerging economies?
Rapid economic growth based on industrialization, major social inequalities, uneven development of territory and reliance on exports.
Why do countries go into debt?
Finance large projects(highways,dams) , fund social programs, extraction of raw materials
What do the international monetary fund (IMF) do?
They work with the poor countries to reduce their debt. It’s main objective is to oversee global economic stability.
What is the urban-rural gap?
People living in cities usually have a higher income than those in rural areas
What are the elements needed to benefit from globalization?
Solid economy- diversified economy, money for investment and a lot of consumers.
.
Good governance- democratic countries have better economic results than countries with human rights issues.
Effective social policies- usually educated and healthy populations are more productive.
International influence- the international trade and finance system in place benefits mostly wealthy countries.
List the 3 inequalities that exists
The urban-rural gap, gender inequalities and unequal income.
What do trade flows follow?
The economic growth.
Following WW2, trade Mainly took place where?
It took place between the countries in the north.
