Trade Basics
Trade Organizations and Agreements
Fiscal Policy
Monetary Policy
Potpourri
100
In absolute terms, the ability of a nation, company, or individual to carry out a particular economic activity more efficiently than another.
What is absolute advantage?
100
The only global international organization dealing with the rules of trade between nations. Its goal is to help producers of goods and services, exporters, and importers conduct their business by lifting barriers to trade.
What is the World Trade Organization (WTO)?
100
In economics and political science, it is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.
What is fiscal policy?
100
The process by which the monetary authority (e.g. the central bank) of a country controls the supply of money.
What is monetary policy?
100
The total amount of money in circulation or in existence in a country.
What is money supply?
200
The ability of a nation, company, or individual to carry out a particular economic activity at a lower opportunity cost than another.
What is comparative advantage?
200
An agreement signed by Canada, Mexico, and the United States, creating a trilateral rules-based trade bloc in North America.
What is the North American Free Trade Agreement (NAFTA)?
200
This fiscal policy gives people more income to spend, which will hopefully stimulate the economy due to increased demand.
What is cutting taxes?
200
The central bank of the United States. It was created by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system.
What is the Federal Reserve (or the "Fed")?
200
An Act of Congress that created and set up the Federal Reserve System, the central banking system of the United States of America, and granted it the legal authority to issue Federal Reserve Notes (now commonly known as the U.S. Dollar) and Federal Reserve Bank Notes as legal tender.
What is the Federal Reserve Act of 1913?
300
When a country exports more than it imports.
What is a trade surplus?
300
This "restriction" to free trade is a tax on importations that trade organizations and free-trade agreements seek to reduce or eliminate.
What is a tariff?
300
This fiscal policy is intended to provide more jobs to unemployed people so that they have more money to spend, thereby stimulating the economy.
What is increasing government spending?
300
A central bank regulation, often called a cash-reserve ratio, that sets the minimum fraction of customer deposits and notes (i.e. money) that each commercial bank must hold as reserves (rather than lend out). To increase money supply, the Fed reduces the ratio. To reduce money supply, the Fed raises the ratio.
What is the reserve requirement?
300
The interest rate charged to commercial banks and other depository institutions for loans received from the Fed’s discount window. To increase money supply, the ?Fed can lower the rate. To reduce money supply, the Fed can raise the rate.
What is the discount rate?
400
When a nation imports more than it exports.
What is a trade deficit?
400
This "restriction" of free trade is a limit on importations that trade organizations and free-trade agreements seek to reduce or eliminate.
What is a quota?
400
This political party prefers to cut taxes to stimulate the economy and cut spending to reduce the national debt.
What is the Republican Party?
400
The purchase and sale of U.S. government bonds by the Fed. To increase money supply, the Fed buys government bonds, paying with new dollars (i.e. quantitative easing). To reduce money supply, the Fed sells government bonds, taking dollars out of circulation
What are open-market operations (OMOs)?
400
The idea that tax breaks or other economic benefits provided to businesses and upper income levels will benefit poorer members of society by improving the economy as a whole (i.e. by creating jobs).
What is "trickle-down" economics or theory?
500
The difference in value between a country's imports and exports. (Ideally, it is favorable.)
What is balance of trade?
500
Negotiated at a United Nations conference, it is a multilateral agreement regulating international trade signed in 1947.
What is the General Agreement on Tariffs and Trade (GATT)?
500
This political party prefers to increase government spending to stimulate the economy and raise taxes to reduce the national debt.
What is the Democratic Party?
500
The three primary elements of the Federal Reserve System.
What are the Board of Governors, the Regional Federal Reserve Banks (12 total), and the Federal Open Market Committee?
500
Argument that economic growth can be most effectively created by lowering barriers to produce (supply) goods and services as well as invest in capital. Consumers will then benefit from a greater supply of goods and services at lower prices; the investment and expansion of businesses will increase demand for employees. Typical policy recommendations are lower marginal tax rates and less regulation.
What is supply-side (or "voo-doo" economics)?
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