Chapter 1 - The Global Economy

Question 1

Export

Answer 1

Products sold from one country to another

Question 2

Import

Answer 2

Products bought by one country from another

Question 3

Trade balance

Answer 3

The difference between its total value of exports and it’s total value of imports

Question 4

Trade surplus

Answer 4

Countries that export more than they import

Question 5

Trade deficit

Answer 5

Countries that import more than they export

Question 6

Bilateral trade balance

Answer 6

The difference between exports and imports between two countries
Ex. The US trade deficit with China was more than 2 billion every year between 2005 and 2009

Question 7

Value added

Answer 7

The difference between the value of the product when it leaves a country and the cost of parts and materials purchased in that country

Question 8

Offshoring

Answer 8

That so many countries are involved in manufacturing the final product and its components

Question 9

Import tariffs

Answer 9

Taxes on international trade

Question 10

Gross domestic product (GDP)

Answer 10

The value of all final goods produced in any year

Question 11

Default

Answer 11

Stopped paying

Question 12

Migration

Answer 12

The movement of people across borders

Question 13

Foreign direct investment (FDI)

Answer 13

The movement of capital across borders

Question 14

Vertical FDI

Answer 14

Foreign direct investment from developed to developing countries

Question 15

Horizontal FDI

Answer 15

Foreign direct investment between developed countries

Question 16

Fixed exchange rates

Answer 16

Officially set to fluctuate within a very narrow range

Question 17

Floating exchange rates

Answer 17

Move up and down within a wide range

Question 18

Exchange rate crisis

Answer 18

When a currency experiences a sudden and pronounced loss of value against another currency

Question 19

Income

Answer 19

How much money is being gained

Question 20

Expenditure

Answer 20

How much money is being spent

Question 21

Deficit

Answer 21

The difference between income and expenditure is negative

Question 22

Surplus

Answer 22

The difference between income and expenditure is positive

Question 23

Wealth

Answer 23

Net worth; assets minus liabilities

Question 24

Policies

Answer 24

Direct government actions

Question 25

Regimes

Answer 25

Political conditions

Question 26

Institutions

Answer 26

Overall legal, political, cultural and social structures that influence economic and political actions

Question 27

Common currency

Answer 27

Shared monetary organization was shared policy responsibility

Question 28

Dollarization

Answer 28

Countries who choose to use currencies over which they have no policy control (El Salvador and Ecuador)

Question 29

Income per capita

Answer 29

Amount of income per citizen

Question 30

Income volatility

Answer 30

Fluctuations in the growth of income per capita, measured by the standard deviation

Question 31

Trade barriers

Answer 31

All factors that influence the amount of goods and services shipped across international borders

Question 32

International trade

Answer 32

The movement of goods and services across borders