Chapter 22 Vocabulary
1. Define the term => Reciprocal Trade Agreement.
2. Define the term => Hawley-Smoot Tariff Act.
1. Agreement between nations to lower taxes and establish trade during the 1930's
2. A law, enacted in 1930, that established the highest protective tariff in U.S. history, worsening the depression in America and abroad.
1. Define the term => Central Planning
2. Define the term => Laissez-Faire Economics
3. Define the term => Economic Coordination
1. A government guiding economic activity.
2. A theory that opposes government interference in economic affairs beyond what is necessary to protect life and property.
3. to reap the gains from trade, the choices of individuals must be coordinated. To make coordination work, four complimentary social institution have evolved over the centuries: firms, markets, property rights, and money.
1. What was Adam Smith's country of origin?
2. True or False: Adam Smith advocated for mercantilism.
1. Scotland
2. False - capitalism
1. Based on the Unit 6 Lecture, what are the two main factors which influence a currency's exchange rate?
2. How does the demand for a currency impact its exchange rate? (Reference the lecture)
3. How does the supply of a currency impact its exchange rate? (Reference the lecture)
1. Demand and Supply.
2.High Demand = Increased Value/ Low Demand = Diminished or Decreased Value
3. High Level of Supply = Decreased Value/ Low Level of Supply = Increased Value
1. Define Capitalism.
2. True or False: Capitalism can be defined as a MIXED ECONOMIC system.
3. True or False: People predominantly own/control the four factors of production in Capitalism.
1. An economic system in which most of the resources of production are privately owned
2. False - Free Market
3. True
1. Who was David Ricardo?
2. What key principle or law did he develop?
3. Define or explain this law.
1. English economist who formulated the "iron law of wages," according to which wages would always remain at the subsistence level for the workers because of population growth.
2. Law of Comparative Advantage
3. The ability to produce a good at a lower opportunity cost than another producer
Define the term => Capitalism
Define the term => Managed Capitalism
Define the term => Democratic Socialism
1. An economic system in which a country's trade and industry are controlled by private owners for profit rather than by the state (private property, supply and demand driven)
2. A market economy with strong government intervention and cooperation among corporations.
3. A form of socialism that guarantees civil liberties such as freedom of speech and religion.
1. True or False: David Ricardo was from Spain.
2. True or False: David Ricardo advocated for the practice of Absolute Advantage.
3. Define the term - Absolute Advantage.
1. False - England
2. False - Comparative Advantage
3. The ability to produce a good using fewer inputs than another producer
1. True or False: The global economy refers to the economies of only western nations such as the United States, Canada, and Europe.
2. True or False: One benefit of Globalism (through Comparative Advantage) is that it allows countries to focus on becoming more efficient at the things they manufacture or provide.
1. False - All countries
2. True
1. Define the term Socialism.
2. True or False: Socialism is only categorized as an economic system.
3. True or False: Socialism can be defined as a Mixed economy and a Command economy.
1. A system in which the means of production are owned by the state & resources are allocated through central planning
2. False - Socialism is both an economic and a political system.
3. Technically true - it depends on the type of socialism. Democratic Socialism or Managed Capitalism is still considered a Mixed Economy. True Socialism leading toward Communism is considered a Command Economy.
Define the European Union.
Define the World Trade Organization (WTO).
Define a Revenue tariff.
1. An international organization of European countries formed after World War II to reduce trade barriers and increase cooperation among its members.
2. International organization derived from the General Agreement on Tariffs and Trade (GATT) that promotes free trade around the world.
3. A tax on imports used primarily to raise government revenue without restricting imports
Define the term => Communism.
Define the term => Karl Marx.
Define the term => Nationalization of Industry.
Define the term => KBG.
1. A theory or system of social organization based on the holding of all property in common.
2. 19th century philosopher, political economist, sociologist, humanist, political theorist, and revolutionary. His analysis of history led to his belief that communism would replace capitalism as it replaced feudalism.
3. Converting private industry into a public (government-controlled) industry
4. The Soviet secret police, responsible for spying on Russian citizens to catch people working against the communist government.
1. True or False: Karl Marx wrote the Communist Manifesto.
2. True or False: Karl Marx was a materialist who did not believe in God. Instead, he believed that the government/state should take the place of God in society.
3. True or False: The Communist Manifesto endorsed the economic system of Capitalism.
1. True
2. True
3. False - Communism
1. What is the United Nations? (Based on the Lecture)
2. What is the United Nations' central function?
3. True or False: The International Monetary Fund is part of the United Nations.
4. True or False: The central function of the International Monetary Fund is to allow countries access to the various currencies they need to conduct trade.
1. International Governmental Entity - Legislative in Nature
2. To maintain international social, economic, and political stability - limit genocide, economic crisis, medical crisis, etc.
3. True
4. True
1. Define the term Communism.
2. True or False: Communism can be classified as a Command Economy and a Totalitarian system.
3. Define the term Totalitarianism based on the Unit 6 Lecture.
1. An economic and political system in which all property is publicly owned and the government makes all decisions regarding the four factors of production.
2. True
3. A political, social, and economic system in which the central Government controls every aspect of its citizens' lives.
Define General Agreement on Tariffs and Trade (GATT).
Define Globalization of Markets.
What countries were involved in NAFTA?
1. An agreement that established an international forum for negotiating mutual reductions in trade restrictions
2. National markets aren't distinct entities (isolated) Moving towards a system where national markets MERGE into one global market.
3. Canada, United States, & Mexico
1. Define the term => Glasnost
2. Define the term => Perestroika
3. Define the term => Collectivization
4. Define the term => Social Purging
1. A policy of the Soviet government allowing freer discussion of social problems.
2. A bold economic program launched in 1987 by Mikhail Gorbachev to free up Soviet industry and businesses.
3. The process seen in the Soviet Union and Communist China to form communal work units for agriculture and manufacturing--from private hands to large, collective, government operations. (MASSIVE KILLINGS)
4. Chinese youth, inspired by Mao, killed anyone (intellectuals in particular) that espoused "Westernized" thoughts or endorsed "free market" theories
[Reference - Short History of Exchange Rate]
1. 1870 to 1971 => [Fill in the historical event here]
2. 1930 => [Fill in the historical event here]
1. Universal adherence to the Gold Standard
2. The United States’ Great Depression weakened the Gold Standard worldwide
1. What was the Bretton Wood Conference?
2. What happened because of the Bretton Wood Conference (Listed two items found in the Unit 6 Lecture)
1. 44 Nations meant in 1944 to discuss how to "restart" international trade once WWII ended
2. The American Dollar became the Middle Man for international trade (other nations determined their currency's value based on the dollar), obtained dollars by exporting American goods/services, borrowed money from the U.S., received $ from the U.S. as gift/financial Aid, and created International Monetary Fund (IMF)
1. Define the term Managed Capitalism.
2. True or False: Managed Capitalism can be classified as a Market Economy.
3. What are the two characteristics of Managed Capitalism referenced in the Unit 6 Lecture? (Look at the slides)
1. Hypothetically a market economy with strong government intervention & cooperation among corporations
2. False - Mixed Economy due to the heavy amount of intervention conducted by the government
3. Eliminates competition => Hurts consumers & Governments are often “in bed” with major corporations!!!
Explain what a Quotas is.
Define the term Mercantilism.
Who controls the Four Factors of Production in a Free Market Economy?
1. Limitations on the amount of specific products that may be imported from certain countries during a given time-period
2. An economic system (Europe in 18th C) to increase a nation's wealth by government regulation of all of the nation's commercial interests
3. The people/citizens are the primary holders of power (The central government does play a small regulatory role).
1. Define the term => Mao Zedong
2. Define the term => Mikhail Gorbachev
3. Define the term => Vladimir Putin
4. Define the term => Joseph Stalin
1. Leader of the Communist Party of China that overthrew Jiang Jieshi and the Nationalists. Established China as the People's Republic of China.
2. Head of the Soviet Union from 1985 to 1991. His liberalization effort improved relations with the West.
3. Elected President of Russia in 2000, launched reforms aimed at boosting growth and budget revenues and keeping Russia on a strong economics.
4. Bolshevik revolutionary, head of the Soviet Communists after 1924, and dictator of the Soviet Union from 1928 to 1953.
[Reference - Short History of Exchange Rate]
1. 1936 to 1944 => [Fill in the historical event here]
2. 1944 to 1973 => [Fill in the historical event here]
3. 1971 => [Fill in the historical event here]
1. WWII eliminates international trade and further weakens the trade system
2. Bretton Wood System is started by Allies - American dollar becomes the fixed currency for international currencies
3. President Nixon removed the United States from the Gold Standard
1. What is a Tariff?
2. Define the following term => EXPORT.
3. Define the following term => IMPORT.
4. Define the following term => Quotas
1. Tax placed on an imported good (protects domestic goods from foreign competition)
2. Goods exiting the country to be sold in other countries for a profit.
3. Foreign goods entering into a country to be bought by the citizens of that country at a loss.
4. Limiting the quantity of a particular good that may enter a country in a particular year
1. Who was Lenin?
2. Who was Stalin?
3. What was the "Five Year Plan"?
4. Who was Gorbachev?
1. Founded the Communist Party in Russia and set up the world's first communist party dictatorship (1917)
2. The henchman of Lenin, later assumes power after Lenin mysteriously dies. Brutal dictator from 1928 to 1953.
3. Stalin's economic policy to rebuild the Soviet Union after WWI. Tried to force industrialization => result in famine and mass deaths
4. Led the Soviet Union between 1985-1991. Attempted to modernize the Soviet Union and open the nation up to trade with the West. Instituted two policies: Glasnost and Peretrokia