Global Issue Test 2

The market determines the price of the currency

Bretton Woods system

The primary role of IMF loans is to

Help stabilize a country's economy when the country has severe budgetary imbalances

The liberal world economic order sought by the United States and other Western countries after WWII was based on

Open Markets, freer trade, and free flowing capital

The idea of comparative advantage is that:

States should specialize in producing the goods which they produce best and trade for goods that other states produce best

Through _________________, the IMF and World Bank set a series of often stiff requirements when establishing an agreement with a borrowing country, pressing such steps as trade liberalization, fiscal responsibility, and privatization.

Structural Adjustment Programs

The decision to help Europe and Japan rebuild, such as with the Marshall Plan in Europe, showed that

The U.S. needed rebounding markets for trade and investment

Floating exchange rates, which much of the world shifted to after 1971, differ from fixed exchange rates in that with floating exchange rates

The market determines the price of the currency

In a socialist system

The state owns and controls key means of production

The General Agreement on Tariffs and Trade (GATT) was the precursor to the

World Trade Organization

For people and countries to develop and prosper, they need

Capital (goods, services, and money)

LDCs have often been unable to take advantage of their "comparative advantages" in agricultural production because

Corrupt leaders in LDCs have stolen profits and/or siphoned off outside loans meant to strengthen comparative advantages MDCs protect their own agricultural production from cheaper imports from LDCs

The difference between foreign direct investment (FDI) and foreign portfolio investment (FPI) is that

FDI is investing more in fixed assets (companies and real estate), as opposed stocks and bonds (which is portfolio investment)