Shared Flashcard Set

Details

IPE definitions
Part #1
10
Economics
Undergraduate 4
05/15/2012

Additional Economics Flashcards

 


 

Cards

Term

Asian Financial Crisis

Definition
  • Occured in 1997 following collapse of the Thai currency against the US dollar
  • During the 1990s these countries became dependent upon exports, which made them more susceptible to currency movement. 
  • Investors sold the local currency due to their concerns about the exchange rate
  • This began a financial contagion across the region as other currencies became suspect in countries such as South Korea, Indonesia, and Malaysia. 
  • This event caused these nations to rethink their policies concerning captail outflows. 
Term

Balance Payments

Definition
  • Summary of countries international interactions with the rest of the world over a specific period of time. 
  • With all components included the balance of payments should always balance to equal 0. 
  • Two parts to BoP
  1. current account-records the sum of the flows of goods between one country and the rest of the world. 
  2. capital account-records the movement of short and long term capital. 
Term

Creative Destruction

Definition
  • The notion behind the free market's ability to create progress
  • This idea encapsulates the notion that the marketplace destroys bad business in order for the strongest to survive and allow for better enterprises to develop. 
  • This pattern moves society forward. 
  • An example of this can be the downfall of the cassette tape in favor of the creation of CDs. 
Term

Derivatives

Definition
  • Financial instruments derived from securities such as futures options and bonds. 
  • they are contracts between two parties that specifies conditions under which payments and payoffs are to be made.
  • insure businesses and individuals against the risk of falling or rising prices (230). 
  • traders use them to make money by betting on the value of the product at some time in the future. 
Term

Export Processing Zones

Definition
  • an industrial zone that produces goods for export that has been designated free of all duties and taxes by the government 
  • Attractive to foreig investment since they offer low wage labor with minimal external costs
Term

Dollarization 

Definition
  • The replacement of national currency with a foreign currency. 
  • two ways 
  1. De facto- national currency still exists parallel to the foreign currency 
  2. De Jures- occurs by law where the national currency is replaced by the foreign one
  • Countries do this to have safer currency and facilitate trading relationships with a dominant economic partner
Term

Foreign Direct Investment

Definition
  • investments made outside of the home country of the investing company in which control over the resourcs transferred remains wiht the investor
  • This investment bring assets, tech, managment skills, and access to markets
  • FDI not common before WWII
  • FDIs have been a major factor in China's rapid development
Term

Commodity Futures

Definition
  • A contract that is an agreement to buy or sell a commodity at a future date and at a specified price.
  • Buyers use these to minimize the fluctuations in price
  • Sellers used them to lock in a price for their product
Term

Gold Standard

Definition
  • Created during the 19th century when GB was in control of the world economy
  • A monetary system where countries had to fix their currency against the value of gold. 
Term

GNP

Definition
  • Measures the value of the goods and services produced in one year by the citizen of a country
  • This is in contrast to GDP that focuses on the production of goods and services geographically located in the country one is examining. 
  • Key statistic in economic growht for a long time
  • ignored variable such as social and cultural issues
Supporting users have an ad free experience!