Econ chapter 10 vocabulary
Comparative advantage leads countries to trade for what they need because it results in A. isolation. B. unequal distribution of resources. C. unlimited wants. D. specialization.
D
specialization
caused by unequal distribution of resources - need to focus on a certain product or skill
malnutrition
consistently inadequate nutrition
NAFTA
created a free trade zone linking the United States, Canada, and Mexico (North American Free Trade Agreement)
United Nations Development Programme (UNDP)
dedicated to the elimination of poverty. The UNDP is one of the world's largest sources of grant funding for economic and social development. It assists over 177 countries and territories, in which the majority of the world's poorest people live
special economic zones
designated regions that operate under different economic laws from the rest of the country in order to attract foreign investment and promote exports
foreign portfolio investment
foreign investors making purchases in another country's financial markets
APEC (Asia-Pacific Economic Cooperation)
forum for 21 Pacific Rim member economies that promotes free trade throughout the Asia-Pacific region
nongovernmental organizations (NGOs)
independent groups that raise money to fund aid and development programs
World Trade Organization
international organization founded to make global trade more free
MERCOSUR (Southern Common Market)
is similar to the EU in its goals. Its members are the South American nations of Brazil, Paraguay, Uruguay, Argentina, and Venezuela
multinational
large corporation that sells goods and services throughout the world (car companies)
subsistence agriculture
level of farming in which a person raises only enough food to feed his or her family
CARICOM (Caribbean Community and Common Market)
organization made up of 15 Caribbean nations to promote economic integration among members
ASEAN (Association of Southeast Asian Nations)
organization of 10 countries in southeast Asia set up to promote cultural, economic and political development in the region
international monetary fund
promotes international monetary cooperation, currency stabilization, and trade
Smoot-Hawley Act
raising average tariff rates on all imports to 50 percent, caused a rapid decline in international trade
foreign exchange market
system of financial institutions that facilitate the buying and selling of foreign currencies
Central American Free Trade Agreement & Dominican Republic (CAFTA-DR)
the United States government reached a free trade agreement with five nations of Central America
comparative advantage
the ability to produce a product most efficiently given all the other products that could be produced
absolute advantage
the ability to produce more of a given product using a given amount of resources
stabilization program
the changing of a nation's economic policies to meet IMF goals
sustainable development
the goal of meeting current development needs without using up resources needed by future generations
globalization
the increasingly tight interconnection of producers, consumers, and financial systems around the world
deforestation
the large-scale destruction of forests
free trade
the lowering or elimination of protective tariffs and other trade barriers between two or more nations
brain drain
the migration of the best-educated people of less developed countries to developed nations
offshoring
the movement of some of a company's operations to another country
law of comparative advantage
the principle that a nation is better off when it produces goods and services for which it has a comparative advantage
development
the process by which a nation improves the economic, political, and social well-being of its people
literacy rate
the proportion of a nation's population over age 15 that can read and write
balance of trade
the relationship between the value of a country's exports and the value of its imports
privatization
the sale or transfer of government-owned businesses to individuals
interdependence
the shared need of countries for resources, goods, services, labor, and knowledge supplied by other countries
protectionism
the use of trade barriers to shield domestic industries from foreign competition
exchange rate
the value of a nation's currency in relation to a foreign currency
balance of payments
the value of all monetary transactions between a country's economy and the rest of the world
foreign direct investment
this occurs when investors establish a business in another country
General Agreement on Tariffs and Trade
wanted to reduce tariffs and stabilize world trade
How do developed nations differ from LDCs? A. Developed nations, on average, have greater material well-being than LDCs. B. Developed nations, as a rule, have lower GDPs than LDCs do. C. LDCs have higher populations than developed nations. D. LDCs, generally, are richer in natural resources than developed nations.
A
The scarcity of resources and resulting need for choice forces societies to A. specialize in producing certain goods. B. fully develop human capital resources. C. produce as many goods as possible. D. stockpile their natural resources.
A
Which of the following is an example of internal financing? A. Citizens of a country invest money in local banks. B. Mutual funds buy stock in foreign companies. C. Countries receive foreign aid. D. Investors establish a business in another country.
A
Which of the following words BEST characterizes the economies that take part in globalization? A. interconnected B. innovative C. prosperous D. developed
A
Most-Favored Nation
A country that has been granted the most favorable trading terms available by another country.
life expectancy
A measure of the average time someone is expected to live, based on their year of birth, current age, and other factors.
European Economic Community
A regional organisation which aimed to bring about economic integration among its member states.
According to the law of comparative advantage, what good should a producer specialize in making? A. one that a producer can make with fewer workers than all other goods B. one for which a producer has a lower opportunity cost than other producers C. one that a producer has the most resources on hand to produce D. one that a producer can sell for a higher price than other goods
B
Agricultural productivity is high in developed nations MAINLY because of their A. economic freedom. B. advanced technology. C. transportation systems. D. large populations.
B
Based on what you know about U.S. exports, which American industry benefits most from world trade? A. apparel B. entertainment C. wood products D. energy resources
B
Economic policies in many LDCs have traditionally favored A. the masses who congregate in the cities. B. small minorities and city dwellers. C. the masses who live in rural areas. D. small minorities and those in rural areas.
B
What are some of Mexico's main products? A. gold, tin, pineapples, rice B. coffee, cotton, oil, silver C. wood, coal, sugar cane D. tea, palm oil, copper
B
What effect has recent economic growth in Russia had on consumer demand? A. Consumer demand for luxury goods has stagnated. B. Consumer demand for goods and services has grown. C. Consumer demand for goods and services has decreased. D. Consumer demand has remained the same as it was during communism.
B
What has been the trend of the United States balance of trade in recent decades? A. Trade deficits have become increasingly smaller. B. Trade deficits have been growing larger. C. Trade deficits have remained constant. D. The trade deficit has disappeared.
B
What impact did the United States trade imbalance in the 1980s have on the cost of imported goods? A. American consumers had to pay less for imported goods. B. American consumers had to pay more for imported goods. C. American consumers had to pay more for American goods. D. International consumers had to pay more for American exports.
B
Which of the following does the government of a command economy do that is not done by the government in a free market economy? A. It allows supply and demand to determine prices. B. It owns and controls the factors of production. C. It protects property rights. D. It gives individuals the decision about what to make or sell.
B
Which of the following is contributing to rapid population growth in LDCs? A. dropping birth rates B. increased life expectancy C. increased energy consumption D. steady literacy rates
B
Which of the following is the MOST LIKELY result of poor diet and lack of clean water? A. low per capita GDP B. high infant mortality rates C. low energy consumption D. high levels of underemployment
B
Why are some less developed countries unenthusiastic about protecting the environment? A. Protecting the environment is exclusively a goal of developed nations. B. The cost of protecting the environment reduces funds available for development. C. The policies of the World Trade Organization and the International Monetary Fund are burdensome. D. The issues of deforestation and global warming will never affect these LDCs.
B
What effect does a free trade agreement have on the countries that sign it? A. They import and export goods using identical quotas. B. They import and export goods only among themselves. C. They import and export goods among themselves with low or no trade barriers. D. They import and export goods freely to other countries.
C
What is one way in which voluntary export restraints and import quotas are different? A. A VER is set by the importing country, and an import quota is set by the exporting country. B. A VER is an informal trade barrier, and an import quota is a formal trade barrier. C. A VER is voluntary, and an import quota is mandatory. D. A VER is a limit on imports, and an import quota is a limit on exports.
C
Which of the following actions would the International Monetary Fund MOST LIKELY be funding? A. committing funds for primary and secondary education B. building of water purification plants C. lending money to a country with high inflation D. promoting equal voting rights
C
Which of the following describes offshoring? A. A multinational buys spices from Grenada for its packaged rice dishes. B. A multinational constructs a fertilizer plant in Brazil. C. A multinational transfers its tech support from the U.S. to a company in India. D. A multinational sets up restaurant franchises around the world.
C
Which of the following was an argument in favor of NAFTA? A. It would decrease immigration from Mexico. B. It would decrease imports from Europe. C. It would increase exports to Canada and Mexico. D. It would convince other nations to sign the FTAA agreement.
C
Which reason expresses one of the concerns about multinationals? A. They might sell goods for too little. B. They might take over the government. C. They might exploit local workers. D. They might export too many products.
C
Two areas of growth in India's economy are A. scientific research and winter sports tourism. B. copper and mercury mining. C. subsistence farming and sheep ranching. D. high-technology industries and manufacturing.
D
What is a likely effect of a stronger dollar? A. American goods and services would be more expensive for American consumers. B. Imported goods and services would be more expensive for American consumers. C. American exports would be less expensive for international consumers. D. American exports would be more expensive for international consumers.
D
What is the MAIN reason people are moving from rural to urban areas? A. opportunities for education B. lack of agricultural skills C. desire to join relatives D. opportunities for jobs
D
Which commodities are among the leading U.S. imports from China? A. wheat, soy, and flax B. petroleum products, natural gas C. cars, trucks, and heavy machinery D. computer equipment, communication devices
D
Which of the following is TRUE of literacy rates in many LDCs? A. In many LDCs, the literacy rates for women are far ahead of those for men. B. The literacy rates decrease yearly in many LDCs. C. The literacy rates in many LDCs are higher than those of developed countries. D. Literacy rates in many LDCs are affected by the high rate of children leaving school at an early age.
D
Which of the following is a KEY factor that allows companies to continue to succeed in the competitive global economy? A. migration B. manufacturing C. diversity D. innovation
D
Which of the following is an argument frequently given for protectionism? A. to protect multinationals B. to protect free trade C. to protect the government D. to protect jobs
D
Why are trade wars harmful? A. They increase international trade and stimulate the economies of the countries involved. B. They reduce the price of imported goods and services. C. They make it impossible for the countries involved to trade with other countries. D. They lead to a general economic slowdown because of reduced trade.
D
Why were some economists worried about the effects of a flexible exchange-rate system when it was first introduced? A. They expected that local banks were not equipped to deal with a flexible exchange rate. B. They expected countries to engage in more trade wars. C. They expected traders to be confused. D. They expected that changes in the exchange rate would interrupt trade.
D
the euro
The official currency of the European Union
voluntary export restraint
When a country voluntarily limits themself because they want to escape a tariff
embargo
a ban on trade with a particular country
trade war
a cycle of escalating trade barriers
depreciation
a decrease in the value of a currency
import
a good or service brought in from another country for sale
export
a good or service sent to another country for sale
newly industrialized countries (NLCs)
a less developed country that has made great progress toward developing its economy (Mexico, Brazil, Saudi Arabia, South Korea, and several countries in Eastern Europe)
trade barrier
a means of preventing a foreign product or service from freely entering a nation's territory
population growth rate
a measure of how rapidly a country's population increases in a given year
developed nations
a nation with a relatively high average level of material well-being (US, Canada, Japan, Australia, New Zealand, and the nations of Western Europe)
less developed countries (LDCs)
a nation with a relatively low average level of material well-being (Bangladesh, Nepal, Albania, and nations of central and Southern Africa)
free trade zones
a region where a group of countries agrees to reduce or eliminate trade barriers
import quotas
a set limit on the amount of a good that can be imported
trade surplus
a situation in which a nation exports more goods and services than it imports
trade deficit
a situation in which a nation imports more goods and services than it exports
fixed exchange-rate system
a system in which governments try to keep the values of their currencies somewhat constant against one another
flexible exchange-rate
a system in which the exchange rate is determined by supply and demand
tariff
a tax on imported goods
infant mortality rate
a way to look at a country and ask if they're losing a lot of children in childbirth bc that doesn't happen much in a developed country
sanctions
actions a nation or group of nations takes in order to punish or put pressure on another nation
debt rescheduling
an agreement between a lending nation and a debtor nation whereby the lending nation lengthens the time of debt repayment and forgives, or dismisses, part of the loan and, in return, the LDC agrees to accept a stabilization program
appreciation
an increase in the value of a currency
infant industries
an industry in the early stages of development
internal financing
capital derived from the savings of a country's own citizens
foreign investment
capital that originates in other countries, either by foreign direct investment or foreign portfolio investment
remittances
cash payments sent by workers who have migrated to a new country to family members in their home country