WGU C211 Global Economics Terms with 100% correct definitions.

Foreign Direct Investment (FDI) Investment in, controlling, and managing value-added activities in other countries. Mercantilism/Theory of Mercantilism A theory that suggests that the wealth of the world is fixed and that a nation that exports more and imports less will be richer. Strategic Trade Policy Government policy that provides companies a strategic advantage in international trade through subsidies and other supports. Transaction Risk It's the exchange rate risk associated with the time delay between entering into a contract and settling it. Cognitive Pillar The internalized (or taken-forgranted) values and beliefs that guide individual and firm behavior. Normative Pillar The mechanism through which norms influence individual and firm behavior. Regulatory Pillar The coercive power of Governments. Democracy A political system in which citizens elect representatives to govern the country on their behalf. Totalitarianism A political system in which one person or party exercises absolute political control over the population. Civil Law A legal tradition that uses comprehensive statutes and codes as a primary means to form legal judgements. Common Law A legal tradition that is shaped by precedents and traditions from previous judicial decisions. Theocratic Law A legal system based on religious teachings. Property Rights The ability of an individual to own and exercise control over scarce resources. Property Rights (2) The legal rights to use an economic property (resource) and to derive income and benefits from it. Command Economy An economy that is characterized by government ownership and control of factors of production. Mixed Economy An economy that has elements of both a market economy and a command economy. Market Economy An economy that allocates resources through decentralized decisions of many firms and households as they interact in markets for goods and services. Indifference curve A curve that shows consumption bundles that give the consumer the same level of satisfaction. Marginal Rate of Substitution The rate at which a consumer is willing to trade one good for another. Budget Constraint The limit on the consumption bundles that a consumer can afford. Total Cost Is made up of fixed and variable costs. Discount Rate The interest rate on the loans that the Fed makes to banks. Reserve Ratio The fraction of deposits that banks hold as reserves. Monetary Policy The setting of the money supply by policymakers in the central bank. Fiscal Policy The setting of the level of government spending and taxation by government policymakers. Cross-price Elasticity of Demand A measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in price of the second good. Deadweight Costs Net losses that occur in an economy as a result of tariffs. Deadweight Loss The fall in total surplus that results from a market distortion, such as tax. Consumer Surplus The amount of a buyer is willing to pay for a good minus the amount the buyer actually pays for it.