Unit 3 Review

Question 1

Define: Prosperous

Answer 1

Successful in material terms; flourishing, thriving, and good fortune”

Question 2

How does globalization connect to sustainable prosperity?

Answer 2

Globalization can allow companies/government/people to make a lot of wealth that lasts for a long time (sustaining).
Globalization can also use methods that are NOT sustainable to create wealth (natural resources, human labour, etc.)

Question 3

Define: The Gold Standard

Answer 3

Signed in the Bretton Woods Agreement
Fixed Exchange Rate: they would set the value of a country based on the amount of gold it had
Problems: countries needed more money than the amount of gold available

Question 4

Define: The Floating Exchange Rate

Answer 4

Created in 176
The value of a country’s money was now based on a country’s worth on the foreign exchange market (how many imports/exports)

Question 5

The World Bank

Answer 5

Came from the Bretton Woods Agreement
Have member countries
Provide loans to less developed countries
Promotes a “free market”

Question 6

International Monetary Fund (IMF)

Answer 6

Similar to the World Bank (Bretton Woods Agreement origin)
Provides SHORT TERM monetary assistance to countries

Question 7

How did the cold war impact economic globalization?

Answer 7

-War between USSR and USA
-Capitalism VS Communism
-Neither side “won” but at the end of the war, most countries adopted an American style “free market”

Question 8

Define: Free Trade

Answer 8

Trade between countries without any tariffs (taxes)
Positives: Countries can obtain needed goods for a cheaper price
Negatives: Tariffs would benefit underdeveloped countries that have goods that are needed by rich countries

Question 9

Define: General Agreement on Tariffs and Trade (GATT)

Answer 9

Created to outline principles of free trade (23 member countries). Today, they are known as the WTO (world trade organization)

Question 10

World Trade Organization (WTO)

Answer 10

Creates rules and regulations for trade. Helps settle disputes between countries. There are requirements that each country must have to be a member of the WTO

Question 11

Define: NAFTA/USMCA/CUSMA

Answer 11

Free trade agreement between Canada, USA, and Mexico. The agreement allows trade without tariffs, and requires a certain amount of goods to be created in North America using North American labour.
Positives: allows Canada to access a bigger market for their goods, as well as bring-in more goods
Negatives: May rely too much on goods from the USA (this would be bad if anything were to ever happen with the agreement)

Question 12

Define: G7

Answer 12

Group of major democratic countries that meet informally to discuss trade and economics. The G7 countries have nearly 50% of the vote in the World Bank

Question 13

Transnational Corporations (pros/cons)

Answer 13

Positives: Bring wealth to countries, bring employment/jobs, creates expertise for humans, paying taxes to the host country
Negatives: Human rights violations, Capital-intensive-production (human labour), avoiding taxes in certain countries, the environment

Question 14

Define: Subsidiaries

Answer 14

Companies that are controlled by a parent company (transnational)
Ex: Doritos are a subsidiary to Pepsico

Question 15

Define: Trade Blocs

Answer 15

Economic Agreements made between countries/nations that allow for trade liberalization
Ex: NAFTA, European Union, BRICS

Question 16

European Union

Answer 16

The European Union (EU) is an example of a common market: a trading bloc agreement that includes the free trades of goods and services and the free movement of capital and labour within the trading bloc.

Positives: Move freely throughout continent, Shared currency, study/work anywhere, peaceful

Question 17

Define: Common Market

Answer 17

Trading bloc agreement that not only include free trade, but also includes free movement of capital (money/resources) and labour. Often has a shared set of rules/currency/government
Ex: EU

Question 18

Define: Trade Liberalization

Answer 18

describes the process of reducing barriers to trade

This can include things like privatization, encouraging foreign investment, and outsourcing jobs

Ex: Free trade, trade blocs, international agreements

Question 19

Define: Privitization

Answer 19

Selling government owned business to individual (private) owners.
Positives: allows for more competition, allows for more unique products, allows for outsourcing
Negatives: Can set the prices to whatever they want, monopolies

Ex: Air Canada, Petro Canada, Tim Hortons

Question 20

Define: Foreign Investment

Answer 20

countries are allowed to invest their money within other countries (like Canada) to gain a profit.

Positives: Increased wealth, increased knowledge, increase of a needed product/service

Negatives: any profits made in that country do not stay in that country

Ex: Tim Hortons is owned by a Brazilian government, so the profits made by the owner goes to Brazil

Question 21

Define: Outsourcing

Answer 21

Outsourcing occurs when one company hires another company to fulfill certain tasks in production.

For example, our school “outsources” for out janitorial services (we pay a different company to supply janitors)

Outsourcing is one of the major criticisms to Trade Liberalization because it can result in job losses in Canada, and may hire people in countries where there are human rights violations

Question 22

Define: The Paris Agreement

Answer 22

Agreement made between multiple nations to keep the global temperature under 2 degrees

Question 23

Define: Equalization Payments

Answer 23

In Canada, the federal government makes equalization payments to provincial governments of lesser fiscal capacity (they make less money in their province). Equalization payments are entrenched in the Constitution Act of 1982, subsection 36.