Exam 2 Review Flashcards
(30 cards)
Debt-to-GDP Ratio
The ratio of a country’s national debt to its gross domestic product. By comparing what a country owes to what it produces, the debt-to-GDP ratio indicates the country’s ability to pay back its debt. As it grows up, shows less growth/productivity/profit (more distress). Public debt burden must be less than 60% of GDP to be a part of the Eurozone. In America, this idea created the Welfare State, resulting in the New Deal during the Great Depression of the 1930s.
Protectionism
The theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports.This is what countries were doing, but globalization takes away these taxes. Historically, Protectionism is an obstacle in globalization. “The financial crisis of 2008 led to the demise of the Doha Round, as the recession that gripped the United States and Europe from late 2007 to 2009 triggered rising protectionist demands. “
Tariff
A tax on imports or exports. Globalization breaks down this barrier to allow flow of goods, labor, and capital around the world. The GATT of 1944 demanded the lowering tariffs to take goods more frequently.
Underemployment
Educated people are working at low paying/low skill jobs while undereducated people are out of work or only working part time. A product of solvency in the Eurozone. Unemployment/underemployment means no jobs in their chosen field and constipates the world economy.
World Bank
An international organization dedicated to providing financing, advice and research to developing nations to aid their economic advancement founded in 1944. Lead to development around the world, better and cheaper trade, and agriculture funding.
NAFTA (The North American Free Trade Agreement)
An agreement signed by Canada, Mexico, and the United States in 1994, creating a trilateral rules-based trade bloc in North America. Promise to bring jobs and wealth to US but didn’t work out.
Hyperinflation
This is when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency, and causing the population to minimize their holdings of the local money. Hyperinflation is when inflation is over 10%. Prices are growing faster than wage growth. This happened in South American countries in the 1000% in 1980s.
Capital
Wealth in the form of money or other resources owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing. Post WW2 (50s-60s), US has most capital so flows to other nations for reconstruction. A primary influence over all economic globalization is the quick and easy and largely free movement of capital around the world.
European Union
The European Union is a politico-economic union of 28 member states that are located primarily in Europe. Created in 1992 in Maastricht, Netherlands. There was a 1999 deadline for a nation to become a part of the Eurozone. Not all nations in the European Union are in the Eurozone.
Mao Zedong
1893–1976, Chinese Communist leader. Instead of urban factory workers, farmers are exploited. 50 million Chinese deaths (most deadly leader of history). Cultural Revolution in 1966 to create a Marxist state.
Great Depression
An economic recession that began on October 29, 1929, following the crash of the U.S. stock market. The Great Depression originated in the United States, but quickly spread to Europe and the rest of the world. Lasting nearly a decade, the Depression caused massive levels of poverty, hunger, unemployment and political unrest.
Federal Reserve
The central bank of the United States. It regulates the U.S. monetary and financial system. It is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. Established in 1913. Creates ultimate economic cohesion among all states.
“Outsourcing”
A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. This nationalist problem is a major obstacle of globalization. When American companies outsource = less “American” jobs = disloyal.
Deng Xiaoping
Chinese Communist leader. Head of power from 1976 to 1978. He was practical - do whatever is best for China. This opens China up to economic globalization (more capital, more industrialization).
Austerity Measures
Official actions taken by the government, during a period of adverse economic conditions, to reduce its budget deficit using a combination of spending cuts or tax rises. “After Greece agreed to an EU bailout and austerity program in 2010 to avoid defaulting on soaring sovereign debts, Golden Dawn became a significant party at the national level. 46 However, the hard-left, anti-austerity party, Syriza, became the main opposition in 2012, winning more than twice as many votes as Golden Dawn.”
Monetary Policy
Actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Creates economic/political stability. Catalyst for globalization.
Dalai Lama
The spiritual head of Tibetan Buddhism and, until the establishment of Chinese communist rule, the spiritual and temporal ruler of Tibet. The current Dalai Lama is in exile in Tibet and is very vocal about his opinions of China.
Boxer Rebellion
The Boxer Rebellion, Boxer Uprising or Yihetuan Movement was an anti-imperialist uprising which took place in China towards the end of the Qing dynasty between 1899 and 1901. Boxer Rebellion (society of the righteous fist). China wins independence.
Opium Wars
A war between Great Britain and China that began in 1839 as a conflict over the opium trade and ended in 1842 with the Chinese cession of Hong Kong to the British, the opening of five Chinese ports to foreign merchants, and the grant of other commercial and diplomatic privileges in the Treaty of Nanking. Opium Wars (twice), China loses, Britain uses victory to dictate China.
Eurozone
The group of European Union nations whose national currency is the euro. Must maintain a budget deficit no greater the 3% of GDP and public debt burden less than 60% of GDP. Deadline to join in 1999. United Europe.
Subprime Lending
Means making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc. (i.e. Mortgages) Unstable loan - given to one that may not be able to carry burden of that debt. Catalyst to the 2008 recession.
Globalization
The development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets. A primary influence over all economic globalization is the quick and easy and largely free movement of capital around the world.
Jawaharlal Nehru
Jawaharlal Nehru was the first Prime Minister of India and a central figure in Indian politics before and after independence.
“Great Leap Forward”
Chinese history, the campaign undertaken by the Chinese communists between 1958 and early 1960 to organize its vast population, especially in large-scale rural communes, to meet China’s industrial and agricultural problems. The Chinese hoped to develop labour-intensive methods of industrialization, which would emphasize manpower rather than machines and capital expenditure.
