International Political Economy ACTUAL
UPDATED Exam Questions and CORRECT
Answers
International Political Economy - CORRECT ANSWER - Two two-way relationship
between International Politics & International Economics
Globalization - CORRECT ANSWER - The time it takes for goods, people, information,
and money to flow across borders and the cost of moving them are decreasing; international
trade increases relative to domestic trade; and in which the world is increasingly defined by
single markets rather than by many separate markets
economic determinism - CORRECT ANSWER - the assumption that political behavior is
driven by economic motivations and political outcomes are determined by economic power
Laissez Faire economics - CORRECT ANSWER - belief that economics and businesses
function best when there is no government intervention - basis of free market economy
Free market economy - CORRECT ANSWER - Supply and demand, rather than
government, regulates production and labor. Companies sell goods/services at highest price
consumers are willing to pay
Economic liberalism - CORRECT ANSWER - Associated with free market and private
ownership of capital assets. Opposes mercantilism and fuedalism
Adam Smith - CORRECT ANSWER - early advocate for economic liberalism, introduced
in his book. believes that if people are left to their own economic devices, wealth and prosperity
will increase.
David Ricardo - CORRECT ANSWER - 2nd most influential economic influencer behind
Smith - "theoretical father of classical political economy"
, Invisible hand effect - CORRECT ANSWER - Introduced by Adam Smith - "unintended
social benefits of individual self-interested actions" .. used in reference to income distribution
and production
Free trade - CORRECT ANSWER - international trade left to its natural course without
tariffs, quotas, or other restrictions.
Comparative advantage - CORRECT ANSWER - the ability of an individual or group to
carry out a particular economic activity (such as making a specific product) more efficiently than
another activity.
Specialization - CORRECT ANSWER - the overall amount of production and
consumption increases without any increase in inputs
Absolute advantage - CORRECT ANSWER - the ability of a party (an individual, or firm,
or country) to produce a greater quantity of a good, product, or service than competitors, using
the same amount of resources
Collective good - CORRECT ANSWER - The collective goods problem is the problem of
how to provide something that benefits all members of a group regardless of what each member
contributes to it
Free rider problem - CORRECT ANSWER - A person who chooses to receive the benefits
of a "public good" or a "positive externality" without contributing to paying the costs of
producing those benefits
mercantilism - CORRECT ANSWER - the overall amount of wealth in the world was
fixed by the amount of precious metals. Therefore, international trade was a zero-sum game, and
the goal of every state was to run a trade surplus in order to accumulate more money
Relative gains - CORRECT ANSWER - if one state can gain more wealth from a given
transaction, it can potentially increase its military power vis-à-vis the other state
UPDATED Exam Questions and CORRECT
Answers
International Political Economy - CORRECT ANSWER - Two two-way relationship
between International Politics & International Economics
Globalization - CORRECT ANSWER - The time it takes for goods, people, information,
and money to flow across borders and the cost of moving them are decreasing; international
trade increases relative to domestic trade; and in which the world is increasingly defined by
single markets rather than by many separate markets
economic determinism - CORRECT ANSWER - the assumption that political behavior is
driven by economic motivations and political outcomes are determined by economic power
Laissez Faire economics - CORRECT ANSWER - belief that economics and businesses
function best when there is no government intervention - basis of free market economy
Free market economy - CORRECT ANSWER - Supply and demand, rather than
government, regulates production and labor. Companies sell goods/services at highest price
consumers are willing to pay
Economic liberalism - CORRECT ANSWER - Associated with free market and private
ownership of capital assets. Opposes mercantilism and fuedalism
Adam Smith - CORRECT ANSWER - early advocate for economic liberalism, introduced
in his book. believes that if people are left to their own economic devices, wealth and prosperity
will increase.
David Ricardo - CORRECT ANSWER - 2nd most influential economic influencer behind
Smith - "theoretical father of classical political economy"
, Invisible hand effect - CORRECT ANSWER - Introduced by Adam Smith - "unintended
social benefits of individual self-interested actions" .. used in reference to income distribution
and production
Free trade - CORRECT ANSWER - international trade left to its natural course without
tariffs, quotas, or other restrictions.
Comparative advantage - CORRECT ANSWER - the ability of an individual or group to
carry out a particular economic activity (such as making a specific product) more efficiently than
another activity.
Specialization - CORRECT ANSWER - the overall amount of production and
consumption increases without any increase in inputs
Absolute advantage - CORRECT ANSWER - the ability of a party (an individual, or firm,
or country) to produce a greater quantity of a good, product, or service than competitors, using
the same amount of resources
Collective good - CORRECT ANSWER - The collective goods problem is the problem of
how to provide something that benefits all members of a group regardless of what each member
contributes to it
Free rider problem - CORRECT ANSWER - A person who chooses to receive the benefits
of a "public good" or a "positive externality" without contributing to paying the costs of
producing those benefits
mercantilism - CORRECT ANSWER - the overall amount of wealth in the world was
fixed by the amount of precious metals. Therefore, international trade was a zero-sum game, and
the goal of every state was to run a trade surplus in order to accumulate more money
Relative gains - CORRECT ANSWER - if one state can gain more wealth from a given
transaction, it can potentially increase its military power vis-à-vis the other state
