Economy 2

irrational exuberance

"false hopes", acid inflation caused by low interest rates, so people spent money on stock market instead of saving, so stock market prices sky rocketed, -deals w/1990 internet explosion

Friedrich List

(exiled) German economist, nationalist, and author of the "National System of Political Economy" in which he asserts that tariffs and railroads are needed to build a nat'l economy. He supported the formation of a freed trade union (Zollverein) and industry - mercantilist that experienced the benefits of Hamilton's views and implementation of those views on trade. sought multiple investments in different goods, education and technology

protectionism

(we don't want a deficit in trade, we want a surplus) seek to protect national interests + domestic constituencies. Includes: tax laws (tariffs or duties), regulatory laws (public health laws, env.), quota laws (limits on quantities of a certain imported good), antidumping laws (laws prohibiting selling below product cost), subsidies (govt supported monopolies)

Hegemonic state

-A state powerful enough to enforce cooperation through threat of force -Willing to pay the cost of providing a public good

German reparations

-Germany's payments for cost of war -was agreed upon in the Treaty of Versailles (1919) -terribly damaged German economy -France + Britain relied on these payments to pay the US back -When the US stock market crashed, Germany suffered even more, as well as other nations; US also facing the effects of the crash demanded its money back with a greater emphasis

fixed, pegged and floating exchange rates

-the price of currency in units of other currencies, (appreciation and depreciation) Floating: an unmanaged process in which governments neither establish an official rate for their currencies nor intervene to affect the value of their currencies, and instead allow market forces and private investors to influence the relative rate of exchange for currencies between countries (based on the demand for and supply of these currencies) Pegged and fixed: when a government commits itself to keep its currency at or around a specific value in terms of another commodity, such as gold. This resulted from the Bretton Woods system, thus making the US $ the worlds reserve currency. All other countries become begged to the dollar.

Capital One

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China / yuan / renminbi

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Japanese development

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John F Kennedy

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Lyndon B Johnson

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Nandan

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foreign assets

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hazards of specialization

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stimulus package

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Wal-Mart

..., -founded 1962 by Samuel Walton -gained prominence in 90s and 2000s -Biggest global retailer -has created switch where retailer has power instead of manufacturer,. Wal-Mart strong arms Rubbermaid to sell its products at the price Wal-mart wants. This results in outsourcing jobs b/c companies have to produce cheaper to meet Wal-Mart's price standards, ex. Outsourcing of jobs and companies to China -Chin is biggest export to Wal-Mart and China is biggest exporter worldwide, Wal-Mart is biggest retailer worldwide so contributes to trade deficit of U.S. to China. The Chinese sell to the U.S. but the U.S. can't sell to China -creates De-industrialization in the U.S. -portrayed badly in Nickel and Dimed b/c workers receive minimal pay and benefits, also treated poorly and manipulated

RTA / trade agreement

..., A negotiated agreement among two or more countries to limit or alter their policies with respect to trade., Regional Trade Agreement; trade agreement that removes all barriers to trade among member nations while maintaining barriers with non-members (technically these violate GATT and WTO principle of nondiscrimination yet are still legal entities)

Y2K

..., A suspected worldwide disaster in 1999-2000 in which it was thought thatthe international calenders would break down resulting in computer and power failures. It never happened. (B.V.), A computer glitch that only showed the year by the last two digits. It was feared that when the year changed from 1999 to 2000, computers would think it was really 1900 as it only read the last two digits.

credit default swap / AIG

..., Basically insurance - where credit protection seller (insurer) receives premiums, in exchange for agreeing to assume the risk of loss on a specific asset in the event that asset experiences a default. Important in the 2007-8 Subprime Credit Crunch (AIG)

supply chain

..., Global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution and cash.

Price-earnings ratio

..., Ratio between the market price of a stock and the profits per share over the last year. (To compute the P-E ratio, divide the earnings into the market price of stock).

most-favored nation

..., Status in an international trading arrangement whereby agreements between two nations on tariffs are then extended to other nations. Every nation involved in such an arrangement will have most-favored-nation status. This policy is used, particularly by the United States, to lower tariffs, extend cooperative trading agreements, and protect nations from discriminatory treatment. Most-favored-nation agreements can also be used to apply economic pressure on nations by deliberately excluding them from international trade.

assets

..., The entire property of a person, association, corporation, or estate applicable or subject to the payment of debts.

deregulation

..., The process by which governments remove, reduce, or simplify restrictions on business and individuals with the intent of encouraging the efficient operation of markets.

globalization

..., The process by which regional economies, societies, and cultures have become integrated through a global network of political ideas through communication, transportation, and trade.

conditionality

..., When regional or international lending agencies require that recipient national governments accept certain policy conditions in order to receive a loan or some form of economic assistance. includes structural adjustment procedures

WTO

..., _______________, in effect since 1995. It deals with trade regulations amongst states and seeks ultimately to liberalize international trade.

interdependence

..., a relationship between countries in which they rely on one another for resources, goods, or services

capital

..., assets available for use in the production of further assets, previously manufactured goods used to make other goods and services

Washington Consensus

..., label used to refer to the following principles of free trade: 1) that free trade raises the well-being of all countries by inducing them to devote their resources to the production of goods that they produce most efficiently, and 2) that competition through trade raises a country's long-term economic growth rates by expanding access to global technologies and promoting innovation, the view that Global South countries can best achieve sustained economic growth through democratic governance, fiscal discipline, free markets, a reliance on private enterprise, and trade liberalization (promoted through the policies of GATT, IMF and World Bank

Margaret Thatcher

..., leader of conservatives in Great Britain who came to power. Pledged to limit social welfare, restrict union power, and end inflation. Formed Thatcherism, in which her economic policy was termed, and improved the British economic situation. She dominated British politics in 1980s, and her government tried to replace local property taxes with a flat-rate tax payable by every adult. -similar to Reagan in valuing privatization and deregulation

Third World debt

..., money owed by developing countries to richer countries, From commercial banks, governments, IGOs (World Bank; IMF).

stagflation

..., name given the economic condition throughout most of the 1970s in which prices rose rapidly (inflation) but without economic growth (stagnation). Unemployment rose along with inflation. In large part, these conditions were the economic consequences of rising oil prices.

institutional investors

..., organizations, which pool large sums of money and invest those sums in companies. They include banks, insurance companies, retirement or pension funds, hedge funds and mutual funds.

currency crisis

..., when a speculative attack on the exchange value of a currency results in a sharp depreciation of the currency or forces authorities to expend large volumes of international currency reserves and sharply increase interest rates to defend the prevailing exchange rate

Alexander Hamilton

1789-1795; First Secretary of the Treasury. He advocated creation of a national bank, assumption of state debts by the federal government, and a tariff system to pay off the national debt. - mercantilist, argued against specialization in agriculture, and protection of the US infant industries as well as the need for state promotion of domestic industries

Bretton Woods Agreement

1944, Held in _____________New Hampshire, Allied leaders joined and created the IMF, GATT and World Bank. It made the change that all exchange rates were fixed in terms of the dollar (since the gold standard fell during the war, this replaced/reinstated it); the US stood ready to convert foreign holdings of dollars into gold at a rate of $35/ounce

Cold War

1945-1988 The ideological struggle between communism (Soviet Union) and capitalism (United States) for world influence. The Soviet Union and the United States came to the brink of actual war during the Cuban missile crisis but never attacked one another.

soft / hard currency

1: not widely accepted currency - usually limited to its home country or region. a currency that is not fully convertible. However, even a hard currency can be weak relative to another currency because of the relative exchange rates over time. , fluctuates in value and are not considered stable. They are not easily converted 2: Currencies including USD, JPY, GBP and EUR, that are generally accepted in international trade transactions because the money is issued by large countries with reliable and predictably stable political economies.,

tariff/non-tariff barriers

1: taxes placed on imported goods to raise the price of those goods, making them less attractive to consumers. Used to protect domestic industry from foreign competition 2: all barriers other than protective tariffs that nations erect to impede international trade, including import quotas, licensing requirements, unreasonable product-quality standards, unnecessary bureaucratic detail in customs procedures, and so on (an example of neomercantilism taken in the 1970s post OPEC crisis)

Imperialism

A policy in which a strong nation seeks to dominate other countries politically, socially, and economically.

Richard Nixon

Against Keynesiaism and LBJ's Great Society program -- sought to see more economic growth than stability -- unilaterally made the decision to make dollars nonconvertible to gold and to switch to a flexible exchange rate system, which led to increased speculation on currencies and more money in the intl econ

Alan Greenspan

American economist who served as chairman fo the federal reserve from 1987-2006. his advice was to "unleash the markets" it was due to him that there was a repeal of the glass-steagall act. He was celebrated by both sides of the political parties as the savior of the economy due to the repeal, however; the market crashed

economic growth

An increase in the total output of an economy. It occurs when a society acquires new resources or when it learns to produce more using existing resources.

1997 Thai Baht crisis

Baht suddenly collapsed in value resulting in a currency crisis. The Thai govt had GUARANTEED the exchange rate of the baht to be fixed at 25 baht per dollar. Thai banks were found to have bad loans and capital flight commenced. This resulted in an extreme decrease of Thai dollar reserves. Speculation turned this into a self-fulfilling prophecy where everyone pulled their money out, but the Thai govt couldn't give everyone their dollars at once. They were forced to abandon their fixed rate resulting in the collapse of the baht. This caused a plethora of problems for everyone from merchants to businessman.

British hegemony

Britian was said to be more so of a passive hegemon during the 19th century. Although it provided many of the resources necessary for creating the global economy (mainly capital), it was not hegemonic in the sense that the hegemonic stability theory (the idea that international markets work best when a hegemon accepts the costs associated with keeping them open for the benefit of both itself and its allies by providing them with certain international public goods at its own expense)

bailout

Emergency funds given to corporations in order to prevent their collapse. Funds can come from the government or other institutions, can take many forms, and may or may not require reimbursement

British industrialization

Enclosure movement, developed transportation (railways/canals), good resources (coal, iron, steel), industrial innovations, political stability, developed banking system and culture all led to Britain being the first to industrialize.

MNCs

Firm that produces, distributes, and markets its goods or services in more than one country. They are able to influence politics, econ developments, and social relations through the goods and services they produce and the wealth at their disposal. Ex: Microsoft/cocacola.

IMF

Formally charged with providing short-term loans to countries experiencing a current account deficit in their balance of payments (in exchange for the implementation of policies) 1980s worked with World Bank to solve the problem of LDC debt

Larry Summers

Former Harvard President; said women didn't have the mental capacity for science and engineering like men did.

government spending

Government expenditures, both chosen and required for a variety of programs and entitlements.

Ronald Reagan

He developed Reaganomics, the trickle down effect of government incentives. He cut out many welfare and public works programs. He used the Strategic Defense Initiative to avoid conflict. His meetings with Gorbachev were the first steps to ending the Cold War. He was also responsible for the Iran-contra Affair (retreated back to a bipolar view of power, the soviet union as an "evil empire" - encouraged opening the markets, but used the threat of trade sanctions with many nations that supported ideas such as communism, terrorism and apatheid) "hegemony on the cheap"

Thomas Friedman

He wrote, "The World Is Flat," (flat screens, outsourcing etc) and he wants to spread the ideas of globalization to the entire world -- emphasizes the transformation of the production process. Says countries with similar norms wont attack each other and that a Green Revolution would help renew America (The Lexus and the Olive Tree)

capital account

Includes all payments related to the purchase and sale of assets and to borrowing and lending activities. Components include outflow of U.S. capital and inflow of foreign capital (simply put, international investment)

G-8

International organization that promotes economic cooperation: Britain, Canada, France, Germany, Italy, Japan, Russia, and United States

Marshall Plan

Introduced by Secretary of State George G. Marshall in 1947, he proposed massive and systematic American economic aid to Europe to revitalize the European economies after WWII and help prevent the spread of Communism.

Meiji Restoration

Japan was practically medieval in the mid 19th century. This event was a result of the Samuri coup --> no more shogun, restored the emperor to power (_______ oligarchs)

utilitarianism

Jeremy Bentham [1788] and John Stuart Mill [1846] saw the maximization of utility as a moral criterion for the organization of society. [Wikipedia]

Vietnam War

LBJ, This War occurred in _______________ from 1959 to April 30, 1975. The war was fought between the communist North , supported by its communist allies, and the government of South , supported by the United States and other member nations of the Southeast Asia Treaty Organization (SEATO). The United States entered the war to prevent a communist takeover of South as part of their wider strategy of containment. Military advisors arrived beginning in 1950. U.S. involvement escalated in the early 1960s and combat units were deployed beginning in 1965. Involvement peaked in 1968 at the time of the Tet Offensive. Despite a peace treaty signed by all parties in January 1973, fighting continued. In April 1975, North captured Saigon. North and South ____________ were reunified the following year

Navigation Acts

Laws that governed trade between England and its colonies. Colonists were required to ship certain products exclusively to England. These acts made colonists very angry because they were forbidden from trading with other countries.

State / Nation

Nation, state and nation-state are three different concepts. A nation defines a group of people with a shared sense of cultural identity and territoriality. A state is a legal concept describing a a social group that occupies a territory and is organized under common political institutions and an effective government. A nation-state, synonymous with the term country -- since the 1648 Peace of Westphalia, this has been the major political (sovereign) unit of the international system.

Colonialism

Policy by which a nation administers a foreign territory and develops its resources for the benefit of the colonial power...exploitation

Smoot-Hawley Tariff

Pres. Hoover era, legislation passed in 1930 that established very high tariffs. its objective was to reduce imports and stimulate the domestic economy, but it resulted only in retaliatory tariffs by other nations. Was considered the cause for the great depression.

open market operations

Purchases and sales of government and certain other securities in the open market through the Domestic Trading Desk at the Federal Reserve Bank of New York, with the purpose of influencing the volume of money and credit in the economy

Corn Laws

Revised in 1815 these laws didn't allow for importing of cheap grain, this gave way to great anger towards the landed aristocracy who imposed them for their own good. Their repeal signified the end of dominance by the landed nobility

neoliberalism

Revival of Adam Smith's classic economic liberalism (primarily thought of in the 1970s), the idea that governments should not regulate private enterprise and that free market forces should rule , deregulation, privatization, open world market(an agenda of economic policies -- compared to liberalism as a perspective)

Adam Smith

Scottish political economist and philosopher. His Wealth of Nations (1776) laid the foundations of classical free-market economic theory, government should not interfere with economics. Advocates Laissez Faire and founder of "invisible hand", Father of economics. Explained how rational self-interest and competition, operating in a social framework which ultimately depends on adherence to moral obligations, can lead to economic well-being and prosperity.

Henry Paulson

Secretary of the Treasury during the bailout, free market capitalist, republican, used TARP for $700 billion for banks

TRIPs

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement administered by the World Trade Organization (WTO) that sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994.

GATT

The General Agreement on Tariffs and Trade - a multilateral agreement that sought to promote free trade among countries; predecessor to the WTO, established in 1947. Promotes the ideas of reciprocity and nondiscrimination (supposedly) MFN status included in this

World Bank

The World Bank is an international financial institution that provides loans to developing countries for capital programmes. created by the bretton woods agreement (used to be called in the international bank for reconstruction and development -- meant to help European countries redevelop post WWII)

Keynsianism

The economic theory is based on the idea that the state will follow economic policies which regulate the economy in an effort to promote economic growth. The key point to include is that the state can use deficit spending to boost the economy in times of economic downturn--in other words, the state can spend more money than it has to keep the circular flow of goods flowing. When the economy is doing well, the state can cut back and reduce its spending. -combine state and market influences in a way that in the spirit of Adam Smith still relies on the invisible hand but supports a larger but still limited sphere of constructive state action. -state intervention -adopted in modern terms with regard to the current economic crisis (We're all Keynesian now)

Reaganomics

The federal economic polices of the Reagan administration, elected in 1981. These policies combined a monetarist fiscal policy, deregulation of banking, energy, investment, trade markets and supply-side tax cuts, and domestic budget cutting. Their goal was to reduce the size of the federal government and stimulate economic growth. (privatized industries) "trickle down effect"

division of labor

The main focus of Adam Smith's The Wealth of Nations lies in the concept of economic growth. ____________, or specialization is essentially the breaking down of large jobs into many tiny components. Under this regime each worker becomes an expert in one isolated area of production, thus increasing his efficiency. Also also implies assigning each worker to the job that suits him best (different attributes and knowledge)

housing bubble

The most recent speculative bubble over housing prices. Many Americans bought houses they couldn't afford using lax credit and adjustable rate mortgages. The result was a steep drop in prices when mass foreclosures came about. It sent America into the recent "Great Recession."

official reserves

The quantities consisting of foreign currencies that the central banks of nations hold with the IMF, and stocks of gold

Free market

This is the core of Adam Smith's thesis: giving everyone freedom to produce and exchange goods as they pleased (free trade) and opening all markets to competition (international as well as domestic). This became known as the invisible hand

Big 9

This refers to the 9 biggest banks that Alan Greenspan sat down with prior to requesting his $700 billion dollar bailout (basically told them that they were going to take the money)

1994 peso crisis

This was caused by the sudden devaluation of the peso. The govt allowed the rate to be fixed at 4 pesos per dollar. The govt could not keep this so decided to let it float, and the peso crashed. The US rapidly intervened with a $50billion loan

"quiet crisis"

Thomas Friedman's idea to fight the quiet crisis of a flattening world

liabilities

US banks borrow from depositors (you) who are paid interest and FDIC insured, Organization's debts and other financial obligations.

macroeconomic policy

Utilizes government spending and tax policy to influence economic growth. • Government spending is a direct source of demand for specific goods and services. • Increased govt. spending leads to GDP growth. • Decreased govt. spending leads to GDP declines. Tax policy affects how much money people and firms have to spend in the economy. • Tax increases reduce the amount of money available to spend in the economy by citizens.

structural adjustment

World Bank programs which offer financial and management aid to poor countries while demanding privatization, trade liberalization, and governmental fiscal restraint and adopt neo-liberalism

central bank

a government monetary authority that issues currency and regulates the supply of credit and holds the reserves of other banks and sells new issues of securities for the government, A bank whose chief function is the control of the nation's money supply; in the United States, the Federal Reserve System Ex) The main goal of the Federal Reserve is to maintain and control the money supply; they do this through Monetary Policies such as regulating domestic financial institutions and influence domestic and foreign exchange rates

Gold Standard

a monetary standard under which the basic unit of currency is defined by a stated quantity of gold (strong until the end of WWI when it died - temporarily resurrected in the early 1930s - IMF, tied DOLLAR to gold in a fixed exchange rate, variation of this - specifically $35 an ounce)

proletariat

a social class comprising those who do manual labor or work for wages

Karl Marx

a socialist, says after modern industry, society split between middle class (bourgeoisie) and modern working class(proletariat), that next working class would take over, should make a socialist society of revolutionary workers. Followed theory of Hegel (actually hired to write about communism -- not his ideas)

fiscal policy

all economic activity by the government, a government policy for dealing with the budget (especially with taxation and borrowing)

OPEC (Organization of Petroleum Exporting Countries)

an international organization concerned with the crude-oil policies of its member states. This organization was founded in 1960, and has 11 members, including Kuwait, Algeria, Iran, Iraq, Indonesia, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. Due to their control of most of the world's oil supply, they have a strong influence on many industrialized nations. (1973 spike in oil prices)

Positive sum game

any interaction between actors that makes all participants simultaneously better off -- this is the liberalist argument of the benefits of a free marker

TARP

bank side response to US economic crisis, initially turned down by congress then rewritten in-acting equity injectors in which the treasury takes preferred stock in banks and uses leverage to buy up bad debts (every dollar in equity offsets 8-10 dollars in bad debts) A Keynesian style of stimulus initiatives.

stag hunt

basically we must decide whether to act in our own interest or cooperate to save the group (referring to giving up sovereignty in exchange for the regulation and benefits of IOs) : Jean Jaques Rousseau's analogy of the five hunters trying to catch a stag (deer) by cooperating with one another. The analogy forces us to consider whether it is rational to cooperate to solve problems with one another, or not to--given that someone else may choose not to cooperate and ruin things for everyone. The analogy is often applied to security situations that require cooperation to move forward on a problem like arms control.

price is determined

by the point at which quantity supplied equals quantity demanded.

John Maynard Keynes

came at a time of crisis, liberal policy was failing -reacting to wild fluctuations seen in the market -ideally, fluctuations would self-correct -wants to achieve full employment -new policy response to market failure (mixed govt intervention)

contagion

contagious capital flight (MX, East Asia, Russia)

opportunity cost

cost of any activity measured in terms of the value of the best alternative that is not chosen (that is foregone). It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices

radicalism

critiques the failures of the state and markets (anti-system), Belief that rapid, dramatic changes need to be made in the existing society, often including the political system. feel that the current system can't be saved, and starting new is the only option.

structuralism

critiques the failures of the state and markets (structure), a sociological theory based on the premise that society comes before individuals - have their roots in Marxist ideas but do not share the commitment to socialism - however they see the current global system as exploitive

Friedrich Von Hayek

dangers of pure market liberalism to a mixed economic approach (Keynes) -stifling of market incentives -excessive central control -loss of political freedoms His View --> free market = free people who will make good choices

foreign debt (govt or private)

debt we owe to other countries; 2/3 of debt comes from other countries, people, companies and the rest comes from government owing itself

monetary policy

deliberate government efforts to increase the supply or velocity of currency

taxation / tax cuts

designed to equitabley distribute wealth, to protect new industries, or to uplift social conditions / may result in too few dollars chasing too few goods and therefore cause inflation

Specialization

essentially the breaking down of large jobs into many tiny components. Under this regime each worker becomes an expert in one isolated area of production, thus increasing his efficiency. This saves time and enhances overall gains from exchange and trade. Ultimately, this resulted from uneven distribution and attributes but led to greater abundance of the necessities and conveniences of life (similar to division of labor)

Glass-Steagall Act

established the Federal Deposit Insurance Corporation (FDIC) and included banking reforms, some of which were designed to control speculation.; were both reactions of the U.S. government to cope with the economic problems which followed the Stock Market Crash of 1929.

currency speculation

exists whenever someone buys a foreign currency, not because she needs to pay for an import or is investing in a foreign business, but because she hopes to sell the currency at a higher rate in the future (in technical language the currency "appreciates"). This is nothing more than the old rule of buying low and selling high—only with foreign money. - concerned Keynes a great deal

zero-sum game

gains by one party equal the losses for the others. Plays a major role in the realist-mercantilist perspective (not liberal thought)

exports vs imports

goods sent to other countries to sell vs goods sold in our country from other countries

inflation

increased prices for goods and services combined with the reduced value of money

hedge fund

investment instrument that attempts to make a profit from the fact that an asset such as a stock or bond might be trading at different prices in different places. a private investment pool, open to wealthy or institutional investors, that is exempt from SEC regulation and can therefore pursue more speculative policies than mutual funds, known for its risky but lucrative returns.

capital flight

investors transfer their bank accounts out of the country to safe harbor nations. In turn, this creates extreme shortage of funds in the debtor nations and then sends interest rates shooting up in economics, occurs when assets and/or money rapidly flow out of a country, due to an economic event that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic strength. This leads to a disappearance of wealth and is usually accompanied by a sharp drop in the exchange rate of the affected country (depreciation in a variable exchange rate regime, or a forced devaluation in a fixed exchange rate regime)., Also: When residents and nonresidents rush to convert their holdings of domestic currency into a foreign currency, usually taking place when domestic currency is depreciating rapidly or a counry is facing dim economic prospects

Liberalism

market oriented economic model (cooperative), an economic theory advocating free competition and a self-regulating market and the gold standard

bonds / securities

notes of debt - also commonly called "paper" - paid out at an established rate of return or interest over a specified period of time (are effectively tradable loans to governments and private firms)

US Federal Reserve

private system of private banks (not part of govt but President appoints chairman) Jobs: -open market operations: buying and selling securities can "prime the pump" or restrict capital -interest rates: setting the discount rate charged to banks, shapes prime rate for other borrowers -reserve requirements for the level of capital held by banks affect supply

comparative advantage

producer can do both areas efficiently but specializes anyways b/c not enough resources and can make more money (**Ricardo built this idea off of Smith's idea of absolute advantage) included in this is the idea of an inherent opportunity cost

balance of payments

registers an accounting of all of the international monetary transactions between the residents of one nation and those of other nations in a given year -- much like a personal check book

Mercantilism

state-focused economic model (realist) -- a term generally applied to state intervention in an attempt to manipulate market outcomes, typically out of some realist or national interest

initial public offering (IPO)

stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises

stocks / equities

stocks are ownership shares in companies called equities / equities may be reserved for private ownership (family business) or may be sold to the public and traded

current account

that part of the balance of payments recording a nation's exports and imports of goods and services and transfer payments

factor endowments

the amount of land, labor, capital, and entrepreneurship that a country possesses and can exploit for manufacturing -- commonly referenced as part of the Heckscher-Ohlin model

trade

the commercial exchange (buying and selling on domestic or international markets) of goods and services

hegemonic currency

the current most powerful currency --> right now this is the dollar as a result of BWA and the fixed exchange rate at first. many argue different theories on whether or not this will stay this way for long

statistical discrepancies

the idea that in measuring balance of payment, measures are inexact so we must keep track of the margin of ___________________

historical materialism

the idea that the forces of production of society, defined as the sum total of knowledge and technology contained in society set the parameters for the whole economic system (Marx believes this explains the organization of society - low vs high technology)

IPE (International Political Economy)

the interdisciplinary science that examines the dynamic interactions between markets, states and societies, and how the tensions and conflicts between these arenas both affect and reflect conditions outside the nation-state and society

bourgeoisie

the middle class, including merchants, industrialists, and professional people

Peace of Westphalia

the nation-state was born out of this 1648 ________________diplomatic summit -- emphasized the ideas of sovereignty and self-determination as basic principles of the state and thus the global system

interest rates

the percentage of a sum of money charged for its use. Usually lenders will add this onto the amout of money borroted from them. Discount: The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window. SubPrime: characterized by higher interest rates and less favorable terms in order to compensate for higher credit risk. Prime: a term applied in many countries to a reference interest rate used by banks

FDI

the purchase by the investors or corporations of one country of non-financial assets in another country. This involves a flow of capital from one country to another to build a factory, purchase a business or buy real estate."

constructivism

theoretical perspective proposing that learners construct, rather than absorb, knowledge from their experiences

absolute advantage

this is the idea that ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors, using the same amount of resources (Adam Smith "The tailor does not make his own shoes, but buys them from the shoemaker")

GDP/GNP

total goods/services produced by a country // GDP + net transfers of profits from firms and individuals operating abroad

balanced budgets

when revenues equal expenditure (no deficit or surplus)

Alfred Marshall

wrote "Principles of Economics", one ot the earlier writings on how both supply and demand interact to determine price.