Section V (IPE)

Question 1

International Political Economy

Answer 1

The study of power and wealth among states and other international actors

Question 2

Mercantilism/Economic Nationalism

Answer 2

Agrees with realism, due to the anarchic system each state must protect is own interest without seeking mutual gains through international organizations. Opposed to free trade

Question 3

Economic Liberalism

Answer 3

Opposite approach, believes in anarchy but does not see this condition as preventing extensive cooperation to realize common gains from economic exchange. It emphasizes absolute gains, commitment to free markets, free trade, free capital flows, and on open world economy

Question 4

Comparative Advantage

Answer 4

The principle that states should specialize in making goods that they produce with the greatest efficiency and at the lowest cost

Question 5

Competitive Advantage

Answer 5

Using the state to protect domestic industry from competition, build capabilities for self help for national security

Question 6

Absolute Advantage

Answer 6

Only the one who makes the best of that thing can make it (results in a few things of high quality and high cost)

Question 7

Relative Gains

Answer 7

A state’s concern about how much better off it is compared to other states

Question 8

Absolute Gains

Answer 8

The total benefit a state receives regardless of how other states fare

Question 9

Interdependence

Answer 9

Sustained, frequent interaction among states or other actors, doesn’t require giving up any sovereignty

Question 10

Autarky

Answer 10

When a state chooses to avoid trading and instead try to produce everything they need domestically

Question 11

Protectionism/Managed Trade

Answer 11

Protection of domestic industries from international competition

Question 12

Industrial Policy

Answer 12

The strategies by which a government works actively with industries to promote their growth and tailor trade policy to their needs.

Question 13

Infant Industry

Answer 13

A new industry in its early stages that struggles to compete with established, mature industries, often due to factors like lack of experience, scale, or reputation

Question 14

Tariffs

Answer 14

A duty or tax levied on certain types of imports as they enter a country

Question 15

Nontariff barriers

Answer 15

Forms of restricting imports other than tariffs

Question 16

Intellectual Property Rights

Answer 16

The rights of creators of books, films, computer software, and similar products to receive royalties when their products are sold

Question 17

World Trade Organization (WTO)

Answer 17

An IGO that promotes, monitors, and adjudicates international trade, replaced the GATT in 1955

Question 18

General Agreement on Tariffs and Trade (GATT)

Answer 18

Created in 1947 to facilitate freer trade on a multilateral basis, more of a negotiating framework than administrative, didn’t actually regulate trade

Question 19

Organization of Petroleum Exporting Countries (OPEC)

Answer 19

The most prominent cartel in the international economy; its members control about half the world’s total oil exports, enough to affect the world price of oil significantly.

Question 20

International Finance

Answer 20

The study of monetary exchanges and financial relationships between two or more countries

Question 21

Convertible Currency

Answer 21

The guarantee that the holder of a particular currency can exchange it for another currency, some states currencies are nonconvertible

Question 22

Exchange Rate

Answer 22

The rate at which one state’s currency can be exchanged for a different state’s currency

Question 23

Fixed Exchange Rate

Answer 23

The official rates of exchange for currencies set by governments, not a dominant mechanism in the international monetary system since 1973

Question 24

Floating Exchange Rate

Answer 24

The rates determined by global currency markets in which both private investors and governments buy and sell currencies

Question 25

Managed Float

Answer 25

A system of occasional multinational government interventions in currency markets to manage otherwise free-floating currency rates

Question 26

Pegged Exchange Rate

Answer 26

A type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency

Question 27

International Monetary Unit

Answer 27

Standardized currency or unit of account, used for valuing and comparing currencies and facilitating trade/financial exchagnes between countries. Most well-known is the SDR: Special Drawing Right

Question 28

Gold Standard

Answer 28

A system in international monetary relations prominent for a century before the 1970s in which the value of national currencies was pegged to the value of gold/other precious metals

Question 29

Monetary Stability

Answer 29

A state of the economy where the value of money remains relatively constant

Question 30

Inflation

Answer 30

Reduces a currency’s value relative to more stable currencies

Question 31

Balance of Trade

Answer 31

The value of a state's exports relative to its imports

Question 32

Balance of Payments

Answer 32

A record of all economic transactions between a country and the rest of the world, shows how much money,goods, and services are flowing into and out of the country. Composed of three primary parts: current account(trades of goods and services), capital account (one-time transfers), and financial account (reserves, portfolio investment)

Question 33

Balance of Payments Crisis

Answer 33

A large sudden change in balance of payment that is likely to last

Question 34

Exchange Controls

Answer 34

A governmental restriction on the movement of currency between countries

Question 35

Devaluation

Answer 35

A unilateral move to reduce the value of a currency by changing a fixed or official exchange rate

Question 36

Deflation

Answer 36

A general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy

Question 37

Reserves

Answer 37

Hard-currency stockpiles kept by states

Question 38

Central Bank

Answer 38

An institution common in industrialized countries whose major tasks are to maintain the value of the state's currency and to control inflation

Question 39

Discount Rate

Answer 39

The interest rate charged by governments when they lend money to private banks, controls how fast money is injected into the economy

Question 40

Bretton Woods System

Answer 40

A post WWII arrangement for managing the world economy, established at a meeting in Bretton Woods, New Hampshire, in 1944. Its main institutions components are the World Bank and the International Monetary Fund (IMF)

Question 41

World Bank

Answer 41

Formally the International Bank for Reconstruction and Development (IBRD), an organization established in 1944 as a source of loans to help reconstruct European economies. Later, the main borrowers became third world countries and, in the 1990s, Eastern European ones

Question 42

International Monetary Fund (IMF)

Answer 42

An IGO that coordinates international currency exchange, the balance of international payments, and national accounts.

Question 43

National Debt

Answer 43

The amount a government owes in debt as a result of deficit spending

Question 44

Integration

Answer 44

States combine into new, larger sovereign state requiring states to give up some or all of their sovereignty

Question 45

Supranationalism

Answer 45

Larger institutions and groupings such as the European Union to which state authority or national identity is subordinated

Question 46

Functionalism

Answer 46

States work together on practical/technical problems (economic) rather than political ones

Question 47

Neofunctionalism

Answer 47

A theory that holds that economic integration (functionalism) generates a spillover effect and results in increased political integration

Question 48

Free-Trade Area

Answer 48

A zone in which there are no tariffs or other restrictions on the movement of goods and services across borders

Question 49

Customs Union

Answer 49

A free trade area in which participating states adopt a unified set of tariffs on goods imported from countries that aren’t members

Question 50

Common Market

Answer 50

The same as a customs union except that member states also allow labor and capital to flow freely across their borders

Question 51

European Union

Answer 51

The official term for the European Community and associated treaty organizations. At the beginning of 2023, the EU had 27 member states, after Great Britain exited the organization

Question 52

European Coal and Steel Community

Answer 52

A supranational organization formed in 1951 to integrate the coal and steel industries of six European countries (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands)

Question 53

Maastricht Treaty

Answer 53

A treaty signed in the Dutch city of Maastricht and ratified in 1992 renamed the EC as the EU, created a single European currency, created a European police agency, and committed European states to working toward a common foreign policy with an eventual goal of establishing a joint military force

Question 54

Euro

Answer 54

Also called the ECU (European currency unit) a single European currency used by 20 members of the EU that came into full circulation in 2002

Question 55

North American Free Trade Agreement (NAFTA)

Answer 55

A free trade area encompassing the United States, Canada, and Mexico that wa s established in 1994

Question 56

Cultural Imperialism

Answer 56

A term critical of U.S. dominance of the emerging global culture