Final exam Flashcards
(85 cards)
1
Q
consumerism
A
The modern form of consumption; came about largely because of the Industrial Revolution
2
Q
Know what is used to help create new demand or new needs for products among consumers to help capitalism thrive
A
Advertising- turning something you want into something you need
3
Q
Be able to define niche market; be able to identify a type of product that would best be classified as serving a niche market
A
specialized products and services for specialized markets. Things that not everybody needs or wants, but there is a market. Think luxury items. EX: fully loaded ferrari
4
Q
Know what sort of organizations generated the backlash against the rise of consumerism in the places where it originated, as well as the places to which consumerism spread
A
Religion- think 7 deadly sins
5
Q
Be able to identify the social interaction or relationship that consumerism is said to have helped “invent”
A
Dating
6
Q
Layaway
A
Store would set aside product for you, you would make monthly payments on it and then after it is PAID IN FULL you get the product. Unlike credit cards, kind of the reverse of credit.
7
Q
Know what company introduced financing for automobiles during the Great Depression, helping create the credit industry
A
General Motors
8
Q
Know the concept that credit cards helped undermine, a concept that was strong in the days of saving for large purchases or layaway
A
Delayed Gratification
9
Q
Be able to briefly explain why credit card companies and banks promoted credit cards; basically, what about credit cards made them major sources of income for those firms
A
bc they could charge high interest, it was a money earner.
10
Q
Conspicuous consumption
A
consuming in ways as a social statement to others, especially their other Robber Baron peers. Carnegie and Rockefeller had a rivalry in terms of philanthropy.
11
Q
Be able to define “affluenza”
A
dogged pursuit of more in the hopes it eventually makes you happy, accompanied by a perpetual cycle of discontent.
12
Q
whose philosophy was neoclassical views on consumption
A
Jeremy Bentham
13
Q
aspects of the neoclassical views on consumption
A
Traditional way of viewing consumption-People will maximize pleasure and minimize pain (As little amount of work and money)
Individual consumers are modeled after this mythical “homo economicus”- an omniscient being that knows all opportunities and cost, benefits, consequences
The neoclassical view holds that markets are always optimally efficient economically (and morally); internally consistent, but it has problems.
14
Q
Problems with neoclassical views on consumption
A
- Lacks any historical or social context, meaning it doesn’t account for the social dimensions of consumption
- This is due to its representation of consumption as a purely individual act.
- Even when individuals act rationally to maximize utility, that can lead to collective irrationality or market failures; this happens when we reduce social problems to individual ones.
- not always optimally efficient economically and morally.
- Lack any historical or social context
- Failure is as a result of representing consumption as a purely individual act
- Consumers are strongly influenced by one another
- Tragedy of the commons, we fail to see what can happen in the broader picture
15
Q
what did Marx place more importance upon generally
A
placed more importance on production and labor than consumption
16
Q
What are Marx’s views on commodities
A
Commodities are not just THINGS, but embodiments of social relations, complex combinations of labor, nature, and ideology.
17
Q
Use value
A
qualitative subjective dimensions
18
Q
Exchange value
A
the price products command on market
19
Q
Central concepts of the Marxist views on consumption
A
- To Marx, labor was a commodity whose use value was less than exchange value to employers.
- Marx argues that Employers look at all their workers as overpaid
- Employers can’t pay workers the value of their input completely or there would be no profits. They also can’t underpay you. Why Henry Ford paid his workers to be able to afford their vehicles. Most severe internal contradictions capitalism faces. Workers still have to be consumers. Incessant need to find new markets.
20
Q
the cause of underconsumption, and what it means for capitalism
A
Extraction of surplus value by employers leads to underconsumption by the working class and a tendency to crisis.
21
Q
Commodity Chain
A
network of labor and production processes that produce a commodity
22
Q
Know the form of transportation that we characterized as most wasteful in terms of our consumption patterns (especially in the U.S.)
A
Automobile
23
Q
ecological footprint
A
estimate of amount of resources necessary to support a person’s lifestyle
24
Q
inflation
A
the increase in the general level of prices of goods and services
25
barter
Direct exchange of goods and services for other goods and services; the way we did business for most of our history
26
Know the economist who came up with the theory of comparative advantage
David Ricardo-Different regions have long specialized, and continue to specialize, in the production of different types of goods and services
27
Know the 3 implications comparative advantage has for economic geography
- It shows how powerfully trade and exchange shape local production systems
- It reveals that specialization reduces total costs of production (trade improves efficiency even without reallocating resources)
- It shows large markets allow more specialization than small ones; economies of scale develop more easily
28
Be able to briefly explain the central view of the Heckscher-Ohlin Trade Theory
a country should specialize in producing goods that demand the least from its scarce production factors, and export these to obtain goods it is ill-equipped to make
29
Be able to explain the impacts of factor-price equalization when specializing in a labor-intensive good
abundance of labor diminishes, marginal labor productivity rises, and wages increase
30
Be able to explain the impacts of factor-price equalization when specializing in a capital-intensive good
labor becomes less scarce, marginal productivity and wages fall
31
Know some of the flaws of the comparative advantage and Heckscher-Ohlin Trade theories
- Generally, they ignore transportation costs and scale economies
- They also assume perfect knowledge of trade opportunities (and willingness to pursue them)
- They also assume homogeneity of products, perfect competition, immobility of production factors, and freedom from government interference
32
What is the most important flaw of the comparative advantage and Heckscher-Ohlin Trade theories
Failure to account for role of transnational corporations
33
Know the two myths that Michael Porter dismissed about national competitiveness when developing his theory of competitive advantage
Cheap Labor and Abundant Natural Resources
34
Know the KEY to economic success in the competitive advantage model
Productivity growth
35
Know the four attributes that combine to increase or decrease global competitive advantage of a country
- Factor conditions
- Demand conditions
- Supporting industries
- Firm strategy, structure, and competition
36
Exchange rate
In international trade, the buyer country must swap its currency for the currency of the exporting country
37
be able to understand the trade implications for U.S. producers AND consumers if the U.S. dollar is highly valued relative to other currencies OR if it is less valued relative to other currencies
* When the U.S. dollar appreciates (gains value), it can buy more foreign currency (more imports), so we import more…but increased value means more costly American products, so exports decline…
* Ergo, a valuable dollar is not always desirable for U.S. trade
* Do we want a trade balance that is favorable to us? If so, we need a lower valued dollar. If we want to be pro consumer we need a higher valued dollar
38
Know some of the reasons why the U.S. trade deficit has grown so dramatically since the 1970s
- The role of American consumer demands; increasing volume of imports is good for consumers but NOT for domestic producers
- Living above our means…the “selling of America”
39
Know the 3 strategic profit motives driving firms’ decisions to operate abroad
- To obtain natural or human resources
- To penetrate markets
- To increase operating efficiency
40
Know some of the constraints to foreign direct investment (FDI)
- The uncertainties of investing and operating in a foreign environment
- Variability of consumer incomes and preferences from country to country
- Cultural differences in business ethics and protocol
- Legal and tax issues, governmental restrictions
41
Pros regarding foreign direct investment (FDI)
Transnational Corporations TNC- can create jobs, other opportunities, potentially raise standards of living. Benefits for the countries being invested in. Benefits outweigh the costs. offer great potential for economic development
42
Cons regarding foreign direct investment (FDI)
Not generating jobs out of the goodness of their hearts, they’ll generate the amt of jobs needed for their activities. If it DOES have positive repercussions that’s great, but whether it actually helps out the local economy is kind of irrelevant. Remember the driving thing is PROFIT. Establishing local monopolies, can be counterproductive by bankrupting local producers
43
Know some of the management barriers to international trade and investment
- Lack of awareness of opportunities
- Lack of skills
- Fear and/or inertia regarding international trade and FDI
44
Know the country that permits completely free flow of trade across its borders (hint: this is a trick question, so keep that in mind)
NO GOVERNMENT permits completely free flow of trade across its borders
45
Tariff
Taxes or duties levied on products that cross boundaries, Paid by the IMPORTING company
46
Quotas
numerical limits placed on imports, sometimes they are capped, you can only bring in this much and then no more, sometimes you can bring in x amt tariff free, but after this amt, you have to pay a tariff aka stages
47
know some of the other non-tariff government barriers to trade
Subsidies, Licenses, and Other restrictions
48
Know what the main source of income for the U.S. government was prior to the establishment of the federal income tax in 1913
Tariffs
49
Know what GATT stands for
General Agreement on Tariffs and Trade
50
know which organization was created in 1995 by the last round of GATT revision
WTO (World Trade Organization)
51
Know which protection provided by that organization (WTO) created in 1995 is MOST important for the United States
it protects intellectual property rights (patents, copyrights, trade secrets, trademarks, etc.)
52
other two main prohibitions of the WTO
- prohibits members from requiring products to have a certain percentage of product manufactured in their country
- It made quantitative limits (quotas) illegal
53
Know some of the criticisms of that organization created in 1995 by the last round of GATT revision (WTO)
- Failure to establish production standards to protect environment
- Globalization represented by WTO is dominated by TNCs, which are secretive and undemocratic
- Labor union concerns about sweatshops and lowering of wages through globalization
54
Be able to define AND provide an example of each of level 1 of regional economic integration
Free-trade area. Members agree to remove trade barriers among themselves, but continue to follow their own trade practices with nonmembers. Ex. NAFTA (North American Free Trade Association)
55
Be able to define AND provide an example of each of level 2 of regional economic integration
Customs union. Members agree not only to eliminate trade barriers, but also to impose a common set of trade barriers on nonmembers. (Ex. East African Community comprised of Rwanda, Burundi, Kenya, Uganda, Tanzania)
56
Be able to define AND provide an example of each of level 3 of regional economic integration
Common market. Does the same as a customs union, but also permits free mobility to factors of production. (Ex. European Union in total)
57
Be able to define AND provide an example of each of level 4 of regional economic integration
Economic union. All the characteristics of a common market, plus a common currency and a common international economic policy. (Ex. Eurozone EU members)
58
Be able to identify some of the barriers to successful regional integration among developing countries
o The willingness to make political concessions (i.e. give up some degree of sovereignty)
o Historical trade patterns (in the past, developing countries haven’t done a whole lot of trade with each other)
o Poor transportation and energy infrastructure.
59
Know what economic organization represents the largest trading bloc on Earth; know the 6 major goals of that organization
The European Union
- Establishment of a common system of tariffs applicable to imports from non-member countries level 2-4
- Removal of tariffs and import quotas on all products traded among members level 1-4
- Establishment of common policies regarding major economic matters like agriculture, transportation, etc. level 3+, closer to the 4 side
- Free movement of and access to capital, labor, and currency among members level 3+
- Transportation of goods, commodities, and people across borders with no inspection of passport examination level 3+
- Establishment of a common currency
60
Know which country was the first one to leave the European Union
the UK
61
Know the major arguments made in favor of NAFTA
o The enhancement of all three countries’ comparative advantages
o Raising Mexican incomes and the increase in demand for U.S. and Canadian products there
o Stemming the tide of illegal immigration from Mexico
62
know the name (acronym okay here) of the agreement that’s been negotiated to replace NAFTA
USMCA
63
Know what South American country was considered the strongest candidate in terms of potential NAFTA expansion
Chile
64
Know the 9 “reasonable” development goals
* An adequate, healthful diet and clean drinking water
* Sufficient health care
* Environmental sanitation and disease control
* Employment opportunities commensurate with individual talents
* Sufficient educational opportunities
* Individual and collective freedom of expression and freedom from fear
* Decent housing
* Economic activities that do not impose undue costs on the natural environment
* Social and political environments promoting equality
65
Be able to define per capita purchasing power
includes income AND the price of goods in a country; essentially accounts for “cost of living”
66
know what expense is much cheaper in the U.S. compared to other countries with higher per capita GDP figures, giving us greater per capita purchasing power than people in those countries
Housing is cheaper
67
Be able to identify some of the major education issues affecting developing countries
o Worse teacher-student ratios
o Low teacher salaries
o Insufficient funds for buildings and materials
o female literacy rates are lower worldwide than male rates
68
identify the two regions of the world where opportunities for women are most severely limited
Parts of the Middle East and South Asia
69
Know which region of the world is home to 60% of all people infected with HIV
Sub-Saharan Africa
70
Know what two diseases, most often associated with poor sanitation and lack of access to clean drinking water, experience outbreaks that can kill thousands in the developing world
Cholera & dysentery
71
Know the two major reasons why people engaging in subsistence agriculture cannot be expected to be major consumers of non-essential goods
lack income AND the time to be major consumers of non-essential goods
72
Know the core reason why rapid population growth can create a generational cycle of poverty
inhibits the ability of families to SAVE money
73
Be able to define underemployment
someone wants to work full time but there is only part time work available; jobs that have your available knowledge and skills are not available.
74
Be able to define informal economy
low wage, unregulated (sometimes illegal), work that is often oppressive and offers little financial security
75
Know the main reason why less developed countries are more reliant on foreign direct investment (FDI) to create jobs
Less developed countries have less money in their country so they are reliant on FDI, which has a lot of strings attached to it.
76
Know some of the major reasons why labor productivity is lower in the developing world
o Small scale of farming operations (remember subsistence?)
o Low capital investment rates; most capital is generated by foreign-owned firms, who are more interested in exports and profit than job generation
o Shortcomings in technology, infrastructure, energy generation (all things that improve efficiency)
o Lower rates of investment in human capital (education, health, those things that allow us to be more productive in so many ways); the brain drain contributes here to a degree in the developing world
77
Be able to define capital flight
the wealthy firms and individuals in the developing world putting money in overseas banks (in the developed world) for safekeeping
78
know the three major reasons why capital flight occurs
o Concerns about expropriation by corrupt governments
o Unfavorable exchange rates brought on by inflation
o Possibility of business or bank failures
79
Be able to identify an example of the bad terms of trade that are legacies of imperialism and often drive debt (remember the Mauritania-France example)
* Huge land holdings often used to produce export crops, NOT domestic food
* The landless often work for below-subsistence wages in feudal serf-like conditions
* Mauritania sells iron ore to France, France turns it into steel and then sells it back to Mauritania
* Had primary sector products, but didn’t have any secondary sector products. Steel gets sold back to them at higher cost
80
Know which country in Southern Africa took a disastrous approach to land reform in the late 1990s-early 2000s, wrecking its economy in the process
Zimbabwe
81
Know some of the aspects of the IMF’s structural adjustment programs
o Reductions in government subsidies for the poor (fuel)
o Rise in interest rates to attract foreign investors
o Devaluation of currencies (which drives up price of imports)
82
Know the major issue with debt moratoriums, write-downs or cancellations of debt
-Gets you out of immediate trouble but shuts off future lines of credit.
EX: If all of us are lent $20 under the assumption we pay coop back on Friday. We don’t have the money, and coop says we don’t owe him anymore. What is the likelihood that coop will lend us money again when we couldn’t pay back the first time.
83
Who came up with sociological views on consumption and who did he study to devise it?
```
Thorsten Veblen, ruling class
looked at the first millionaires; consumption as a social statement to others, an expression of wealth and status
```
84
Know which country created the model for trade that created and perpetuates unequal exchange between the developed and developing countries
Great Britain
85
Be able to define monoeconomic state
Relying on one particular good to drive most of its economy
