Module 2 : The Global Economy

Question 1

is a multi-dimensional process although it has always been thought as an economic phenomenon.

Answer 1

Globalization

Question 1

For anthropologist Arjun Appadurai, different kinds of globalization occur on multiple and intersecting dimensions of intersections which he calls

Answer 1

Scapes

Question 2

is a historic process, the result of human innovation and technological progress.

Answer 2

Global Economy

Question 3

It refers to the increasing integration of economies around the world through the movement of goods, services, and capital across borders.

Answer 3

Global Economy

Question 4

For Benczes (2014), economic globalization can thus have several interconnected dimensions such as the following:

Answer 4

1. The globalization of trade of goods and services;
2. The globalization of financial and capital markets;
3. The globalization of technology and communication; and
4. The globalization of production

Question 5

According to Szentes (2003), it is a process making the world economy an “organic system” by extending transnational economic processes and economic relations to more and more countries and by deepening the economic interdependence among them.

Answer 5

Global Economy

Question 6

According to them, globalization began since homo sapiens began from migrating from the African continent to populate the rest of the world.

Answer 6

Grills and Thompson

Question 7

According to them, Globalization considered the Silk Road (Asia, Europe, Africa) the best example for archaic globalization 5,000 years ago.

Answer 7

Frank and Grills

Question 8

He considered the discovery of America by Christopher Columbus in 1492 and the discovery of the direct sea route to India by Vasco de Gama in 1498 as the two (2) greatest achievements of human history.

Answer 8

Adam Smith

Question 9

According to him, if global economy did exist during 1500 to 1800, it was only in the sense of trade and exchange rather than production. Countries were mostly self-sufficient and autarkic, the UK and the Netherlands being the only exceptions.

Answer 9

Gereffi

Question 10

According to him, the real breakthrough came only in the 19th century. The annual average compound growth rate of world trade saw a dramatic increase 4.2 per cent between 1820 to 1870, and was relatively high, at 3.4 per cent between 1870 and 1913.

Answer 10

Maddison

Question 11

is often referred to as the “golden age” of globalization, characterized by relative peace, free trade and financial and economic stability

Answer 11

World War I

Question 12

According to them, the age of globalization began when “all important populated continents began to exchange products continuously and its values sufficient to generate crucial impacts on all trading partners.”

Answer 12

Dennis Flynn and Arturo Giraldez

Question 13

connected Manila in the Philippines and Acapulco in Mexico.

Answer 13

Galleon trade

Question 14

his was the first time the Americas were directly connected to Asian trading routes

Answer 14

Galleon trade

Question 15

According to Salvatore (2007), ________________ refers to rules, customs, instruments, facilities, and organizations for effecting international payments.

Answer 15

international monetary system

Question 16

In the liberal tradition, the main task of ________is to facilitate cross-border transactions involving trade and investment.

Answer 16

international monetary system

Question 17

According to Cohen (2000), is more than just money or currencies; it also reflects economic power and interests as money is inherently political, an integral part of high politics of diplomacy.

Answer 17

international monetary system

Question 18

was believed to guarantee a non-inflationary, stable, economic environment, a means for accelerating international trade.

Answer 18

Gold

Question 19

According to ________, Germany joined the IMS in 1872, France in 1878, United States in 1879, Italy in 1884, Russia in 1897 and roughly 70 per cent of the nations participated in the gold standard just before the outbreak of World War I.

Answer 19

Meisser

Question 20

During ______________, when countries depleted their gold reserves to fund their armies, many were forced to abandon the gold standard. Since Europeans have low gold reserves, they adopted floating currencies that were no longer redeemable in gold

Answer 20

World War I

Question 21

The US dollar was the only convertible currency of the time, so the US committed itself to sell and purchase gold without restrictions at US$35 an ounce. All other participating but not convertible currencies were fixed to the US dollar

Answer 21

Gold Exchange Standard

Question 22

became responsible for post-war reconstruction, while the explicit mandate of International Monetary Fund (IMF) was to promote international financial cooperation and buttress international trade

Answer 22

The International Banks Reconstruction and Development (IBRD or World Bank)

Question 23

was largely influenced by the ideas of British economist John Maynard Keynes who believed that economic crisis occurs not when a country does not have enough money, but when money is not being spent and, thereby, not moving.

Answer 23

Bretton Woods system

Question 24

When economies slow down, according to Keynes, governments have to reinvigorate markets with infusions of capital.

Answer 24

global Keynesianism

Question 25

It's' main purpose was to reduce tariffs and other hindrance to free trade

Answer 25

General Agreement on Tariffs and Trade (GATT)

Question 26

They argued that the governments’ practice of pouring money into their economies had caused inflation by increasing demand for goods without necessarily increasing supply.

Answer 26

Friedrich Hayek and Milton Friedman

Question 27

Friedrich Hayek and Milton Friedman believed that government intervention in economies distort the proper functioning of the market. Critics labelled this thinking as?

Answer 27

neo-liberalism

Question 28

is a set of 10 economic policy reform package set by Washington-based institutions such as the International Monetary Fund (IMF), World Bank (WB), United States Department of the Treasury and eventually by the World Trade Organization (WTO).

Answer 28

The Washington Consensus

Question 29

Rules under Washington Consensus (list 5):

Answer 29

1. Fiscal policy discipline 2. Effective public spending 3. Tax reform 4. Competitive exchange rates 5. Trade liberalization

Question 30

After the signing of the _____________, the European Economic Community was established by Germany, France, Italy, Netherlands, Belgium and Luxembourg. The original six (6) founding members created a common market where goods and services, capital and labor moved freely

Answer 30

Rome Treaty

Question 31

European Economic Community was established by? The original six (6) founding members created a common market where goods and services, capital and labor moved freely.

Answer 31

Germany, France, Italy, Netherlands, Belgium and Luxembourg.

Question 32

was formally established when the Maastricht Treaty came into force in 1993.

Answer 32

European Union (EU)

Question 33

_______ became the second most widely used reserve currency

Answer 33

Euro

Question 34

According to Ohmae (1995), __________ceased to exist as primary economic organization units in the wake of a global market.

Answer 34

states

Question 35

To ___________, globalization transforms the national economy into a global one where there will be no national products or technologies, no national corporations, no national industries.

Answer 35

Reich (1991)

Question 36

According to them, globalization is redefining the role of nation-state as an effective manager of the national economy. The state is the main shelter from the perverse effects of a free market economy.

Answer 36

Boyer and Drache (1996)

Question 37

According to him, governments are acting as the midwives of globalization.

Answer 37

Brodie (1996)

Question 38

admit states are not influenced uniformly by globalization.

Answer 38

Milner and Keohane

Question 39

According to _____________, the major players of present global economy are the transnational corporations (TNCs) which account roughly two-thirds of world export.

Answer 39

Gereffi (2005)

Question 40

are concerned more with profits than with assisting the social programs of the governments hosting them.

Answer 40

TNCs

Question 41

refers to countries’ lowering their labor standards, including the protection of workers’ interests, to lure foreign investors seeking high profit margins at the lowest cost possible.

Answer 41

race to the bottom

Question 42

weakens environmental laws to attract investors, creating fatal consequences on their ecological balance and depleting them of their finite resources like coal, oil and minerals

Answer 42

Government

Question 43

is, however, considered to be a myth. More concerns have been raised with regard to its impact on the worldwide distribution of income.

Answer 43

Contemporary globalization

Question 44

They argue that only non-globalizer countries failed to reduce absolute and relative poverty in the last few decades. On the other hand, countries that have embraced globalization (trade openness) have benefited from openness considerably.

Answer 44

Dollar and Kraay

Question 45

claimed that globalization can indeed reduce poverty but it definitely does not benefit all nations.

Answer 45

World Bank

Question 46

This claims that capitalism under globalization reinforces the structural patterns of unequal change

Answer 46

world system analysis

Question 47

a historical social system, created a dramatically diverging historical level of wages in the economic arena of the world system.

Answer 47

capitalism

Question 48

It is the widespread international movement of goods, capital, services, technology and information

Answer 48

Economic Globalization

Question 49

It refers to an entity created by treaty, involving two or more nations, to work in good faith, on issues of common interest.

Answer 49

International governmental organizations

Question 50

It include charities, non-profit advocacy groups, business associations, and cultural associations.

Answer 50

International non-governmental organizations (NGOs)

Question 51

have international supply chains, favoring manufacturing in low-cost countries.

Answer 51

Businesses

Question 52

nvolves the contracting out of a business process (e.g. payroll processing, claims processing) and operational, and/or non-core functions (e.g. manufacturing, facility management, call center support) to another party.

Answer 52

Outsourcing

Question 53

have business operations in multiple countries, either simply because they want to sell goods and services into the local market, or because a given country has advantages like natural resources, low wages, low taxes, or a useful talent pool.

Answer 53

Multinational corporations

Question 54

transfer significant amounts of money through remittances to lower-income relatives.

Answer 54

International migrants

Question 55

Benefits of Globalization: (FET)

Answer 55

Foreign Direct Investment Technological Innovation Economies of Scale

Question 56

Risks of Globalization (NEI):

Answer 56

Interdependence National Sovereignty Equity Distribution

Question 57

tends to increase at a much greater rate than the growth in worldtrade, helping boost technology transfer, industrial restructuring, and the growth of global companies.

Answer 57

Foreign Direct Investment

Question 58

Increased competition from globalization helps stimulate new technology development, particularly with the growth in FDI, which helps improve economic output by making processes more efficient.

Answer 58

Technological Innovation

Question 59

Globalization enables large companies to realize economies of scale that reduce costs and prices, which in turn supports further economic growth, although this can hurt many small businesses attempting to compete domestically.

Answer 59

Economies of Scale

Question 60

Globalization leads to the interdependence between nations, which could cause regional or global instabilities if local economic fluctuations end up impacting a large number of countries relying on them.

Answer 60

Interdependence

Question 61

Some see the rise of nation-states, multinational or global firms and other international organizations as a threat to sovereignty. Ultimately, this could cause some leaders to become nationalistic or xenophobic

Answer 61

National Sovereignty

Question 62

The benefits of globalization can be unfairly skewed towards rich nations or individuals, creating greater inequalities and leading to potential conflicts both nationally and internationally as a result.

Answer 62

Equity Distribution

Question 63

is the exchange of capital, goods, and services across international borders or territories.

Answer 63

International Trading System

Question 64

in which countries gradually cut down trade barriers and opened up their current accounts and capital accounts.These organisations work towards the facilitation and growth of international trade.

Answer 64

General Agreement on Tariffs and Trade

Question 65

It replaced the gold standard with the U.S. dollar as the global currency.

Answer 65

BRETTON WOODS SYSTEM

Question 66

It is a monetary system where a country's currency or paper money has a value directly linked to gold

Answer 66

THE GOLD STANDARD

Question 67

a term to describe currency that is used because of a government's order.

Answer 67

Fiat money

Question 68

that the currency must be accepted as a means of payment.

Answer 68

fiat

Question 69

Today, ________ is used by the banks as a way to hedge against loans made to their government and as an indicator of economic health.

Answer 69

Gold

Question 70

Compare Fiat Currency VS. Cryptocurrency

Answer 70

FIAT CURRENCY | Physical/credit currency, unlimited supply, centralized, government issued, can come with interest, government regulation and market control value CRYPTOCURRENCY | Digital currency, Limited supply, Decentralized, Computer produced, No interest at all, and supply and demand control value

Question 71

They were then entitled to borrow what it needed, within the limits of its contributions.

Answer 71

IMF

Question 72

is to loan money to economic development projects in emerging market countries.

Answer 72

WORLD BANK

Question 73

They are both known for their strong belief in free-market capitalism.

Answer 73

Friedrich Hayek and Milton Friedman

Question 74

It is a policy model—bridging politics, social studies, and economics—that seeks to transfer control of economic factors to the private sector from the public sector.

Answer 74

NEOLIBERALISM

Question 75

Critics argue that advocating the use of free markets in areas, such as health and education is misplaced because by nature these are public services, which are not subject to the same profit motivation.

Answer 75

Market fundamentalism

Question 76

A broadly neoliberal policy has seen a widening inequality of both wealth and income in the Western world. This is due to several factors, such as skilled workers in a position to command higher wages, but low-skilled workers in flexible labour markets more likely to see stagnant wages. Firms with monopoly power can increase producer surplus at the e

Answer 76

Monopoly and monopsony power.

Question 77

have not necessarily helped economic development, but instead have contributed to increased financial instability, which has caused wider economic shocks, e.g. post 2007 credit crunch.

Answer 77

The growth of financial flows

Question 78

An important problem for neoliberalism is that policies which may work in one country doesn’t necessarily work in all countries.

Answer 78

One size fits all.

Question 79

It refers to the period of extreme stress in global financial markets and banking systems between mid 2007 and early 2009.

Answer 79

THE GLOBAL FINANCIAL CRISIS (GFC)

Question 80

followed cost many their jobs, their savings, or their homes.

Answer 80

The Great Recession

Question 81

kept the banks operating and slowly restarted the economy.

Answer 81

Wall Street bailout

Question 82

was primarily caused by deregulation in the financial industry. That permitted banks to engage in hedge fund trading with derivatives.

Answer 82

2008 Global Financial Crisis

Question 83

raised the fed funds rate just as the interest rates on these new mortgages reset.

Answer 83

the Federal Reserve

Question 84

Causes of the 2008 Global Financial Crisis (CPDC)

Answer 84

1. Caused by deregulation in the financial industry 2. Permitted banks to engage in hedge fund trading 3. Banks demanded more mortgages 4. Created interest-only loans affordable to subprime borrowers