Personalities
Institutions
Terms
Theories
History
100
Published Wealth of Nations in 1776 attacking mercantilist thought and practice. He argues that economies flourished when markets are left free of state control. Competition, not monopoly, maximizes economic advantage. Protective barriers on trade reduce competition and thus are a “way of shooting oneself in the foot.” State-business collaboration is just another name for corruption. He advocated “absolute advantage,” that each state should produce the product that it is best at.
Who is Adam Smith
100
Established in 1947, this was a series of multilateral trade negotiations meant to facilitate agreement and liberalization of international trade.
What is GATT
100
A tax on imports or exports, generally meant to raise prices on a foreign product and encourage demand for a comparable domestic product.
What is a tariff
100
Policies that restrain trade between states through methods such as tariffs, restrictive quotas, or a variety of other government regulations designed to manipulate competition between imports and goods and services produced domestically.
What is Protectionism
100
An economic theory and practice, dominant in Europe from the 16th to the 18th century, that promoted governmental regulation of a nation's economy for the purpose of augmenting state power at the expense of rival national powers. Mercantilism includes a national economic policy aimed at accumulating monetary reserves through a positive balance of trade.
What is Mercantilism
200
Inspired by Adam Smith’s Wealth of Nations, David Ricardo introduced the idea of “comparative advantage” in 1817 to explain why countries engage in international trade even when one country's workers are more efficient at producing every single good than workers in other countries.
Who is David Ricardo
200
Established as part of the Bretton Woods system wherein only the USD was valued to and exchangeable for gold. All other currencies were pegged to the USD.
What is the gold exchange standard.
200
Different types of friction that prevent mutually beneficial trade or render it more difficult: a marketplace, a modicum of peace and security, a common language, a currency, sufficient trust between the parties, protection against third parties, etc.
What are transaction costs
200
The ability of a state to produce more of a good product or service than competitors, using the same amount of resources.
What is absolute advantage
200
A 1944 international conference that established an international monetary management system and rules for commercial and financial relations among the world's major industrial states after WWII. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states. It established the gold exchange standard, IMF, and what would become the World Bank.
What is Bretton Woods
300
Influential English economist who argued that reduced interest rates and heavy investment in infrastructure could raise a state out of depression. To do this, states required a certain amount of national self-sufficiency not available under the doctrine of free trade. Unqualified free trade was feasible only when societies were ruled by narrow technocrats with faith in a uniform type of capitalism.
Who is John Maynard Keynes
300
Established in 1995, this replaced GATT and was intended to supervise and liberalize international trade. The organization deals with regulation of trade by providing a framework for negotiating and formalizing trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements.
What is WTO.
300
A policy in international markets in which governments do not restrict imports or exports. By reducing barrier, trade is encouraged which allows states to take advantage of comparative advantage, thus increasing global economic output.
What is free trade.
300
An agent has a comparative advantage over another in producing a particular good if he can produce that good at a lower relative opportunity cost, i.e. at a lower relative marginal cost prior to trade. Under free trade, an agent will produce more of and consume less of a good for which he has a comparative advantage. He demonstrated that if two countries capable of producing two commodities engage in the free market, then each country will increase its overall consumption by exporting the good for which it has a comparative advantage while importing the other good.
What is comparative advantage.
300
The pre-WWII global economic system wherein each nation’s currency is pegged to the value of gold, and could be exchanged for gold.
What is the gold standard
400
Won a Nobel Prize in economics in 2008. Wrote a paper that was "the manifestation of a guilty conscience" after changing his mind about the effects of globalization on income inequality.
Who is Paul Krugman.
400
Established as part of the Bretton Woods System, this has become the chosen instrument to prevent national economic meltdowns – albeit with neoliberal strings attached. Created to promote international monetary cooperation, it has increasingly become the organizer of rescue packages and the lender of last resort.
What is the IMF.
400
The move toward completely unrestricted trade, dismantling not only international barriers such as explicit tariffs and quotas on imported goods and services, but also the barriers that result from diversity of national domestic policies relating to goods, services, the production of goods, and service providers.
What is hyperglobalization.
400
Letting exchange rates move in response to private capital flows while domestic monetary policy remained autonomous and insulated. For example, a state can have lower interest rates than elsewhere if it is willing to allow its currency to depreciate in value.
What is floating currencies
400
An economic system, popularized in 1750s France, in which transactions between private parties are free from intrusive government restrictions, tariffs, and subsidies, with only enough regulations to protect property rights.
What is Laissez Faire
500
He is the "image most people carry . . . preaching endlessly about the virtues of free markets and the perils of government intervention."
Who is Milton Friedman
500
The GATT was eventually only part of what was originally meant to be this more ambitious organization, which would have included agreements of commodity price stabilization, international antitrust, and fair labor standards.
What is the International Trade Organization.
500
"If you know more than I do about the value of what you are selling me . . . then we're in for a troubled relationship." This distorts incentives in a wide range of markets, constituting one way in which unregulated markets can fail.
What is asymmetric information
500
An economic ideology that began to dominate in the 1970s which supports and encourages extensive economic liberalization, free trade, and reductions in government spending in order to enhance the role of the private sector in the economy. It has been described as “capitalism with the gloves off.”
What is neoliberalism.
500
This system replaced the gold exchange standard after President Nixon decoupled the USD from gold in 1971.
What is the floating rate system.
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