Global Political Economy Final Exam with correct answers 2024
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Module
Global Political Economy Fin
Institution
Global Political Economy Fin
Index of Openness correct answers (Exports + Imports) / GDP
How open a country is to trade
FDI correct answers Foreign Direct Investment
Investment in a country
Something tangible such as a factory, buildings, etc.
Does not include portfolio investments such as stocks, bonds, etc.
Indic...
Index of Openness correct answers (Exports + Imports) / GDP
How open a country is to trade
FDI correct answers Foreign Direct Investment
Investment in a country
Something tangible such as a factory, buildings, etc.
Does not include portfolio investments such as stocks, bonds, etc.
Indicates a very strong economy
Less volatile than portfolio investment
Gini Coefficient correct answers Measures income distribution of a nation's residents
0 = complete equality
1 = one person has all of the wealth
Big 3 International Economic Institutions correct answers 1. IMF
International Monetary Fund
Lender of last resort
Conditionality
2. World Bank
Working to end poverty
3. WTO
World Trade Organization
Regulates trade
Interindustry vs Intraindustry Trade correct answers Interindustry trade = between
different industries
Bread for steel, steel for bread
Intraindustry trade = within the same industry
Bread for bread, steel for steel
Tariffs correct answers Tax
Indirect limits on imports
Bad because they lead to inefficient allocation of resources and deadweight losses
Quotas correct answers Direct limits on imports
Deadweight Loss correct answers Market inefficiencies due to tariffs
, Price floors and price ceilings
Factor Endowments correct answers Land, Labor, and Capital
Economies of Scale correct answers Decreasing average costs over a relatively large
range of output
Internal Economies of Scale correct answers Within firms
Autos, jet aircraft, Apple
Large firms, decreased costs
External Economies of Scale correct answers Industry as a whole grows
Pharmaceuticals and craft beer
Larger firms do not necessarily have an advantage over smaller firms
Diseconomies of Scale correct answers Forces that cause larger firms and
governments to produce goods and services at increased per-unit costs
More units = higher shipping costs or supply issues with related parts
Ex. Apple chip A and chip B
Current Account correct answers All the goods and services flowing between a country
and the rest of the world
If the current account is negative, there is a trade deficit (the country's imports >
exports)
The difference between exports and imports is the trade balance
The difference between credits and debits is the current account balance
3 Parts of Current Account correct answers 1. Trade Balance - Largest component,
measures the difference between exports and imports of goods and services
2. Primary Income - Income received abroad minus income paid abroad
3. Secondary Income - Transfers made abroad minus transfers received abroad
Goods and services, investment income, unilateral transfers
Financial Account correct answers Financial transactions between the US and the rest
of the world
If there is a deficit in the current account, there will be a surplus in the financial account.
They balance each other out
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