Quiz2
The Post-Bretton Woods Monetary Order
- Floating currency values, but considerable effort expended to restrict ranges within which X∆s float - Main action is in preventing/mitigating currency crises
Basel I
- set of international banking regulations put forth by the Basel Committee on Bank Supervision (BCBS) that sets out the minimum capital requirements of financial institutions with the goal of minimizing credit risk
Treaty of Maastricht
1992; European nations agree to make an economic and political integration with a common currency, passport, and banking system; Established 3 foundational pillars of the EU with a different policy areas and different decision- making processes
tax haven
A country with exceptionally low, or even no, income taxes, financial regulation are lax
fixed exchange rate
An exchange rate policy under which a government commits itself to keep its currency at or around a specific value in terms of another currency or a commodity, such as gold.
European Union
An international organization of European countries formed after World War II to reduce trade barriers and increase cooperation among its members.
Economic and Monetary Union (EMU)
Eurozone; The agreement of many European countries to adopt a common currency. Many are reconsidering whether its smart to stay in the EMU after the global economic crisis
intermediate goods
Ex: steel for car majority of the worlds exports inputs, parts, and components used in production of finished goods
depreciation of currency
Exchange rate against other currencies has fallen (decrease in demand and increase in supply)
Bank for International Settlements (BIS)
One of the oldest international financial organizations, created in 1930, its members include the world's principal central banks, and under its auspices they attempt to cooperate in the financial realm.
Copyrights
These protect the expression of an idea, not the idea itself. They are provided to authors of artistic works like books, movies, television programs, music, magazines, photographs, and software. Under the WTO TRIPS, this must last the life of the author plus fifty years.
Internal devaluation
Where a country seeks to regain competitiveness through lowering wage costs and increasing productivity and not reducing value of exchange rate.
External devaluation
Where a government intentionally depreciates their own currency by using reserves to purchase foreign currencies. The aim is to improve the competitiveness of domestic goods
intergovernmentalism
Where national governments are the primary actors who make decisions by converging national interests
Impossible Trinity
a restriction whereby a country can maintain only two of the following three policies—free capital flows, a fixed exchange rate, and an independent monetary policy
toxic securities
a term for subprime mortgages during the 2008 financial crisis because of their toxic effect on a firm's capital and solvency
Internet of Things (IoT)
a world where interconnected, Internet-enabled devices or "things" can collect and share data without human intervention
The policy of the U.S. Federal Reserve to increase the money supply by purchasing hundreds of billions of dollars in bonds and mortgage-backed securities is called a) quantitative easing. b) crony capitalism. c) a Ponzi scheme. d) the Dodd-Frank Act.
a) quantitative easing.
A top government minister, in which country, said that Greece should leave the EU? a. Germany b. Italy c. Austria d. Belgium
a. Germany
Which of following was required of the UK before negations could begin with the UK for terms related to its future relationship to the EU? a. The UK had to apply to leave the EU under Article 50 of the TEU. b. A new Prime Minister had to be elected. c. The House of Lords had to approve the referendum. d. None of the above.
a. The UK had to apply to leave the EU under Article 50 of the TEU.
central bank
an institution designed to oversee the banking system and regulate the quantity of money in the economy
Committee on Foreign Investment in the United States (CFIUS)
an inter-agency group that vets proposed foreign investments in the U.S for potential national security risks
Flexible exchange rates
arrangement in which the forces of supply and demand are allowed to set the price of various currencies we live in this now
economic citizenship
attractive to Chinese and Russians who wish to travel freely across borders, find a safe haven for assets and limit their taxes
subprime mortgage loans
attracts first time buyers, many whom had weak credit scores and unstable incomes\High-interest-rate loans to home buyers with above-average credit risk.
Which candidate for prime minister of Greece promised not to agree to Troika conditions for a third Greek loan, but then did agree to those conditions once he was elected? a) Yanis Varoufakis b) Alexis Tsipras c) Karalos Papoulias d) George Papandreou
b) Alexis Tsipras
What is "bitter medicine"? a) The fees major banks have imposed on customers to bring down bank debt b) Another name for austerity policies in Europe c) The U.S. TARP program d) A drink in honor of all the working class and poor who lost out during the financial crisis
b) Another name for austerity policies in Europe
Which leader complained that by holding (unofficially) weak U.S. dollars, his country was helping pay for the unpopular Vietnam War? a) Harold Wilson of Great Britain b) Mao Zedong of China c) Charles de Gaulle of France d) Lester Pearson of Canada
c) Charles de Gaulle of France
Which of the following institutions is not a member of the Troika? a) The IMF b) The ECB c) The WTO d) The European Commission
c) The WTO
Foreign Direct Investment
changes in where production takes place are frequently tied to changes in patterns of foreign investment Investment made by a foreign company in the economy of another country; mostly overseas
Transnational Corporation
corporations that operate across national borders pay a major toll in shifting global production around the world; GVC's are dominated by this
Forum Shifting
state shift agenda from one multilateral forum ti another in hopes if achieving the best outcome for its national interests
Seigniorage
the difference between the face value of money and the cost of supplying it; the "profit" from issuing money
balance of payments
the difference between the flow of money into and out of a country almost occurred automatically via wage and price adjustments
technological innovation
the discovery and development of new or improved products, services, or processes for producing or providing them
First Sale Doctrine
the doctrine that allows purchasers of a copyrighted work to resell it or rent it out
European Coal and Steel Community (ECSC)
the first supranational institution in post war;
Precariat
the growing number of part-time workers, temporary workers, and others living precariously without stable jobs, occupational identities, or social protections
negative externality
the harm, cost, or inconvenience suffered by a third party because of actions by others
Financial Globalization
the integration of capital and financial markets around the world
Grexit
the potential Greek exit from the eurozone monetary union Grexit from eurozone still possible
currency exchange rates
the price of one country's currency expressed in terms of another country's currency
Adverse Selection
the problem of incomplete information - of choosing alternatives without fully knowing the details of available options
quantitative easing (QE)
the purchase of long term government and private mortgage-backed securities by central banks to make credit available in hopes of stimulating aggregate demand
Information Sovereignty
the right to control flows of information into and within their country
Corporate Social Responsibility
they try to address key social and environmental issues in their business practices
Scaling
turning new ideas into mass produced products
European Commission
two assemblies with appointed officials that became the Responsible for proposing EU legislation, implementing it, and monitoring compliance
triple helix
university-industry-govt relationship that accelerates innovation
outsourcing
Contracting with other companies (often in other countries) for goods and services
reserve currency
Currency held in large amounts by governments for the purpose of setting international debts and supporting the value of their national currency.
credible commitment
a long-term strategic decision that is both difficult and costly to reverse
Financialization
a process of accumulation whereby pursuit of financial gains causes companies to neglect production and reinvestment in technological innovation
Post-Bretton Woods system
A system of flexible exchange rate regimes with no official common denominator.
Geographical Indications
Also known as GIs. Under the WTO TRIPS, intellectual property rights extended to this category which includes plant varieties and trade secrets (such as the formula for Coke, Colonel Sanders' secret recipe, and lists of customers.)
Intellectual Property Rights
Also known as IPRs. These include patents, copyrights, and trademarks.
Research and Development
Also known as R&D. This is believed to give countries a comparative advantage in the global economy.
Traditional Knowledge
Also known as TK. This is the accumulation of knowledge and practices of indigenous communities as they relate to plants, plant uses, agriculture, land use, folklore, and spiritual matters.
Keynesian Compromise
An aspect of the Bretton Woods system. Nations retain the ability to intervene in their domestic economies but agree to limit interference in international economic markets.
Moral Hazard
Arises when people behave recklessly because they know they will be saved if things go wrong
Hot money
Capital which is frequently transferred between financial institutions in an attempt to maximize interest or capital gain.
Basel 2
Continuous refinement of risk and capital Based on 3 pillars: -Minimum capital requirements -Supervisory review process -market discipline
Basel 3
Replacing the current capital Requirements Directives. Goals: -Strengthen bank capital -By increasing liquidity -And decreasing bank leverage . focuses on the risk of a run on the bank by requiring different levels of reserves for different forms of bank deposits and other borrowings.
Base Erosion and Profit Shifting (BEPS)
TNC's are artifically shifting their profits to low tax locations
Publicity Rights
The United States strongly enforces these more than any other country in the world. Famous people and celebrities can ban unauthorized use of their name, image, or identifying characteristics (with exceptions for activities like news reporting.)
Global Value Chains
The full range of activities that firms and workers do to bring a product from its conception to its end use and beyond. For example, western firms engage in high-value functions (i.e. finance) while developing countries perform low-value functions (i.e. extracting raw materials).
Schumpeterian Industries
The name given to high-tech industries after the economist Joseph Schumpeter. He believed that only monopolistic firms would have the incentive and ability to invest in R&D projects. This explains why many key industries are monopolistically structured.
Trademarks
These are signs or symbols (including logos and names) registered by a manufacturer or merchant to identify its goods and services. This is usually granted for 10 years and is renewable. This allows companies to prevent others from using the symbol, name, expression, or slogan.
Patents
They confer the exclusive right to make, use, or sell an invention for a period usually of twenty years. This allows companies to capture the benefits of their R&D expenditure. Most basic criteria for obtaining this are that the invention must be new, useful, and not obvious to someone else in the field.
Trade-Related Aspects of Intellectual Property Rights
This is an agreement under the WTO that requires countries a minimum level of intellectual property rights protection and enforcement.
Compulsory License
This is when a state grants to a domestic private company or government body, with or without the consent of the rights holder, to produce and sell a good under patent. Under the WTO TRIPS agreement, this is allowed so long as the government first negotiates with the patent holder.
Claw Back
This refers to the European Union trying to use GI protection for the names of several dozen meats, cheeses, and alcoholic goods that are considered generic words, including Parmesan cheese, Feta cheese, and Chablis. This is because Europe has the largest number of historically well-known products.
Council of Europe
a council of economic ministers
data localization
a government that companies store and process all information on a country citizens without that country
Which of the following do Balaam and Dillman posit is an important trend in the knowledge structure over the last twenty years? a) Human capital and technology are becoming less important than control of land and natural resources for wealth generation. b) Global profits are increasingly shifting to those who own knowledge and control distribution of knowledge-intensive goods and services. c) Knowledge is becoming less dispersed and easier for countries to control. d) There is a general consensus that most new technology should be in the public domain.
a) Human capital and technology are becoming less important than control of land and natural resources for wealth generation.
Which statement about copyrights is correct? a) The TRIPS agreement stipulates a minimum time period for which member states must give protection to them. b) They confer exclusive rights over an invention for 20 years. c) They protect an idea, not the expression of an idea. d) They are signs and symbols to protect goods and services.
a) The TRIPS agreement stipulates a minimum time period for which member states must
Which statement is inaccurate? a) The United States advocates for information sovereignty. b) The United States believes that information should usually be treated as an un-politicized commodity governed by free trade principles. c) The United States is against data localization rules. d) The United States has a surplus in trade of digital and digitally-enabled services.
a) The United States advocates for information sovereignty.
Which of the following statement is correct? a) The United States spends more money on R&D each year than any other OECD country. b) R&D has become less internationalized since the 1990s. c) In the EU and the United States, most R&D is funded by the government. d) R&D spending as a percentage of GDP is higher in the United States than in Japan.
a) The United States spends more money on R&D each year than any other OECD country.
Which Troika policy generated massive protests and demonstrations in Greece and other European countries because it imposed economic hardship on ordinary people? a) austerity b) haircuts c) Grexit d) Détente
a) austerity
A toxic security is another name for a) bank mortgages and investments that lost a good deal of their value during the global financial crisis. b) credit default swaps. c) the U.S. version of SWFs. d) a new drink in honor of all the CEOs of major businesses who lost their jobs during the financial crisis.
a) bank mortgages and investments that lost a good deal of their value during the global financial crisis.
Which term refers to a process in which investors quickly shift their funds out of a nation in search of a "safe harbor" for their investments? a) capital flight b) a balance of payments crisis c) a speculative attack on a currency d) a panic attack
a) capital flight
Which of the following statements about exchange rates is incorrect? a) Between 2008 and 2017, the euro appreciated against the U.S. dollar. b) Between 2000 and 2008, the U.S. dollar declined in value relative to the euro and renminbi. c) Between 2011 and 2017, the yen appreciated significantly against the U.S. dollar. d) After 2004, the Chinese government let the renminbi depreciate against the U.S. dollar.
b) Between 2000 and 2008, the U.S. dollar declined in value relative to the euro and renminbi.
Which British Prime Minister put the damper on EU integration in the early 1980s by emphasizing neoliberal economic policies? a) Edward Heath b) Margaret Thatcher c) Theresa May d) Tony Blair
b) Margaret Thatcher
Most economic experts argue that the fundamental problem with the EMU is a) lack of authority by the head of the ECB. b) failure to fulfill the requirements of an optimal currency union. c) lack of a common foreign and security policy. d) UK opposition to the euro.
b) failure to fulfill the requirements of an optimal currency union.
Gold Standard
backing dollars solely with gold
Which of the following statements about the financial crisis from 2007 to 2009 is incorrect? a) The U.S. Federal Reserve played the role of "lender of last resort." b) The Federal Reserve rescued AIG, one of the world's largest bank insurers. c) Under Obama, the U.S. Congress passed a $2 trillion stimulus spending package. d) The U.S. temporarily government gained majority ownership of General Motors (GM) and Chrysler.
c) Under Obama, the U.S. Congress passed a $2 trillion stimulus spending package.
Who suggested after World War II that western Europe should forge a "United States" of Europe? a) Queen Elizabeth b) Charles de Gaulle c) Winston Churchill d) Franklin D. Roosevelt
c) Winston Churchill
Which indicator is most important when it comes to determining the balance of payments and whether or not a nation is going into debt? a) the balance of trade b) the capital account c) the current account d) none of the above
c) the current account
This event signaled the beginning of the Asian financial crisis in July of 1997: a) when foreign investors pulled most of their fund out of South Korea b) when the Thai government was overthrown in a military coup c) when the Thai government could no longer support the 25 to 1 value of the Thai baht to the U.S. dollar d) when the IMF signaled that Thailand's government was no longer worthy of credit
c) when the Thai government could no longer support the 25 to 1 value of the Thai baht to the U.S. dollar
Which of the following did the Dodd-Frank Act require? a) Prosecution of Wall Street insiders b) Modification of mortgages for struggling homeowners. c) Tighter limits on bank executives' pay and bonuses in exchange for government bailouts of banks d) Banks' holding of more capital and collateral in reserve
d) Banks' holding of more capital and collateral in reserve
Which of the following was not a characteristic of the fixed exchange rate system of the finance and monetary structure? a) The price of gold was fixed at $35 an ounce. b) The formal and informal rules of this system reflected a political bargain between the United States and Western Europe whereby the United States provided security to Western Europe in exchange for its acceptance of U.S. hegemony. c) The IMF used a variety of borrowing measures to regulate currency value adjustments. d) Currency values were allowed to adjust up or down freely according to supply and demand conditions in the market for the U.S. dollar.
d) Currency values were allowed to adjust up or down freely according to supply and demand conditions in the market for the U.S. dollar.
Balaam and Dillman conclude that which of the following states must assume more hegemonic responsibilities if European states are to continue to cooperate to solve common problems? a) the UK b) the United States c) France d) Germany
d) Germany
Which treaty formally established the "European Union," the European Central Bank, and the Economic and Monetary Union in 1992? a) Treaty of Lisbon b) Treaty of Nice c) Treaty of Amsterdam d) Maastricht Treaty
d) Maastricht Treaty
Which of the following statements would an economic liberal probably agree with? a) Technological laggards need to fight for more "policy space" in IPRs. b) Developed countries use IPRs to monopolize Third World markets. c) Economic elites always seek to create private property rights from socially-produced knowledge. d) Strong IPRs create incentives for creativity and innovation.
d) Strong IPRs create incentives for creativity and innovation.
Which of the following is an example of efforts by developing countries to advance their interests in the face of strong IPRs? a) turning a blind eye to counterfeiting of foreign goods b) lobbying for weakening of the TRIPS agreement c) issuing compulsory licenses d) all of the above
d) all of the above
Since 1944, the role of the IMF in the monetary and finance structure has been a) to increase the amount of liquidity in the international financial system. b) to ensure a stable international monetary system. c) to help countries with balance of payments problems on a short-term basis. d) all of the above.
d) all of the above.
The United States seeks to prevent foreign countries from accessing U.S. advanced technology by a) establishing deemed export controls. b) having CFIUS scrutinize foreign investments in the United States. c) limiting exports of dual-use technologies. d) all of the above.
d) all of the above.
IPRs are an important issue for developing countries because a) they need technology transfer for economic development. b) they would like to move up in global value chains. c) the cost of licensing IPRs from companies in industrialized nations can be high. d) all of these are important reasons.
d) all of these are important reasons.
Financialization is closely associated with each of the following except a) shareholder value theory. b) increased stock buybacks. c) "impatient" investors such as private equity funds. d) higher levels of R&D spending over the long term.
d) higher levels of R&D spending over the long term.
dual-use technologies
defense-funded technological innovations with commercial and civilian use
Which of the following policies would not be considered to be mercantilist? a) deemed export controls b) Made in China 2025 c) Optional Practical Training (OPT) d) "cash-for-citizenship" e) implementation of shareholder value theory
e) implementation of shareholder value theory
Single European Act (SEA)
extensive coordination of monetary policy and etc -established the basis for the single -European market Removed trade barriers -new voting rule -European commission, European Parliament, and ECJ has more power and responsibilities -new policy areas such as environment, research, and tech -forging a common foreign policy by intergovernmental cooperation rather than supranational coordination
positive externalities
external benefits
troika
greece was finally granted a bail out of 10 billion euros from EC and IMF
deemed export controls
limit the transfer of export controlled items or protected technical information to foreigners working or studying in the U.S; uni and private contractors have to obtain licenses to allow foreigners to access this information
capital controls
limits on the flow of foreign exchange and financial investment across countries
speculation
major currency and finance issuebthat concerned keynes Betting that the currency will go up or down in the future An involvement in risky business transactions in an effort to make a quick or large profit.
Integration
moving toward a federalist type union
audience costs
negative repercussions for failing to follow through on a threat or to honor a commitment
credible commitment problem
occurs when (a) an actor who makes a promise today may have an incentive to renege on that promise in the future and (b) power is in the hands of the actor who makes the promise and not in the hands of those expected to benefit from the promise
tax inversion
one of the most controversial ways to lower taxes when one big company sells themselves to itself to a smaller company or gets purchased by a bigger company outside of the country and they set up base
vertically integrated
owning most of the supply chain from the production of materials to manufacturing to wholesale distribution
guaranteed basic income
provides every citizen on the country with an income whether they were working or not working
sovereign wealth funds
quasi-independent bodies that mange pools of capital on behalf on governments
European Economic Community (EEC)
wanted to -gradually eliminate quotas and protectionist trade measures -gradually end border inspections or custom fees between EEC members -promote large-scale production to make products cheaper and more competitive -ensure the complete free movement of goods and people
Brexit
when a majority of voters in Great Britain voted in a referendum to support the UK's exit from the EU Brexit seems irreversible
Offshoring
when corporations movie their manufacturing overseas
Investor-State Dispute Settlement
when manufactures are unable to resolve their issues in a local court they can use the ISDS to resolve their disputes
transfer pricing
when people within the TNC are trading with each other and the prices dont accurately reflect the value the good or service
appreciation of currency
when the value of a currency rises and it can buy more of another currency than before
global value chains
which account for the full range of activities that firms and workers do to bring a product from its conception to its end use of beyond
