POSC 2601 Final Test Questions and Answers Graded A+
the world economy - Answersincreasingly integrated on a global scale, generating wealth at an
accelerated
liberal - Answersa ____ would agree that a government's most useful role is to interfere in economics
only to regulate markets in order to help them function efficiently. that is, politics should serve the
interests of economic efficiency
liberal policy prescription - Answersfree markets and free trade
free economic market - Answersa system where an "invisible hand" acts to guide the most efficient
patterns of production, exchange, and consumption
free trade - Answersthe flow of goods and services across national boundaries unimpeded by tariffs or
other restrictions
supply and demand - Answersdetermines the prices of goods and services in a free market
equilibrium price - Answersthe best possible price for both buyers and sellers to meet in the middle
mercantilism - Answerstrade and economic policies are manipulated to build up a monetary surplus that
could be used to finance war; the creation of wealth underlies state power. economics should serve
politics
exporting firms - Answersbacklash against free trade agreements are unlikely to include...
comparative advantage - Answerstrade the goods states make cheaply/efficiently for those goods and
services they cannot
tariffs and non-tariff barriers - Answerstwo types of protectionist policies
tariff - Answersa duty or tax placed on certain types of imports when they enter a country
non-tariff barrier - Answersany other form of restricting imports besides the use of tariffs (quotas,
subsidies, labor or environmental regulations, etc.)
quota - Answersa unilateral method of protecting domestic producers from foreign competition by
imposing a limit on the maximum volume of allowable imports
protectionism - Answerswhen states manipulate international trade to strengthen one or more domestic
industries and shelter them from the world market
subsidies - Answerspayments by a government to a domestic industry (tax breaks, loans, guaranteed
high prices, etc.)
, catering to the demands of important domestic industries and interests, protecting infant industries,
protecting interests and industries that are vital to national security, and define against predatory
practices - Answersthe four objectives of protectionism
consumers usually pay higher prices for products - Answershow protectionism hurts an economy
balance of trade - Answersthe value of a state's imports relative to its exports
autarky - Answerswhen states try to produce everything it needs by itself
low - Answersautarkic states tend to exhibit ___ growth
expensive goods/services - Answersscarce inputs = ?
cheap goods/services - Answersabundant inputs = ?
economic sanctions - Answersa type of economic pressure; the economic and financial penalties applied
by one or more states against another state, group, or individual
economic warfare - Answersa type of economic pressure; an attack on another country's economy to
weaken the other state's military capabilities and military production
trade wars - Answersa state threatens to inflict economic harm in order to persuade a target state to
agree to terms of trade more favorable to the coercing state
smart sanctions - Answerswhen states target individuals and groups over the entire state
embargo, tariff, non-tariff barrier - Answersexamples of sanctions
rally-around-the-flag effect - Answersincreased short-run popular support of a country's government or
political leaders during periods of international crisis (such as sanctions) or war; can be created by
sanctions
the second state can find other partners - Answersthe existence of world markets may reduce the
leverage that one state can exert over another in economic affairs because ______.
cartel - Answersan association of producers or consumers (or both) of a certain product, formed for the
purpose of manipulating its price on the world market; form to manipulate the price of a certain
product, and most often limit production by each member so as to lower supply; example is the
organization of the petroleum exporting countries (opec)
world trade organization - Answersreplaced the general agreement on tariffs and trade in 1995;
framework relies on reciprocity
trade without discrimination, fair competition, economic development, predictability, freer trade -
Answersgoals of the world trade organization
the world economy - Answersincreasingly integrated on a global scale, generating wealth at an
accelerated
liberal - Answersa ____ would agree that a government's most useful role is to interfere in economics
only to regulate markets in order to help them function efficiently. that is, politics should serve the
interests of economic efficiency
liberal policy prescription - Answersfree markets and free trade
free economic market - Answersa system where an "invisible hand" acts to guide the most efficient
patterns of production, exchange, and consumption
free trade - Answersthe flow of goods and services across national boundaries unimpeded by tariffs or
other restrictions
supply and demand - Answersdetermines the prices of goods and services in a free market
equilibrium price - Answersthe best possible price for both buyers and sellers to meet in the middle
mercantilism - Answerstrade and economic policies are manipulated to build up a monetary surplus that
could be used to finance war; the creation of wealth underlies state power. economics should serve
politics
exporting firms - Answersbacklash against free trade agreements are unlikely to include...
comparative advantage - Answerstrade the goods states make cheaply/efficiently for those goods and
services they cannot
tariffs and non-tariff barriers - Answerstwo types of protectionist policies
tariff - Answersa duty or tax placed on certain types of imports when they enter a country
non-tariff barrier - Answersany other form of restricting imports besides the use of tariffs (quotas,
subsidies, labor or environmental regulations, etc.)
quota - Answersa unilateral method of protecting domestic producers from foreign competition by
imposing a limit on the maximum volume of allowable imports
protectionism - Answerswhen states manipulate international trade to strengthen one or more domestic
industries and shelter them from the world market
subsidies - Answerspayments by a government to a domestic industry (tax breaks, loans, guaranteed
high prices, etc.)
, catering to the demands of important domestic industries and interests, protecting infant industries,
protecting interests and industries that are vital to national security, and define against predatory
practices - Answersthe four objectives of protectionism
consumers usually pay higher prices for products - Answershow protectionism hurts an economy
balance of trade - Answersthe value of a state's imports relative to its exports
autarky - Answerswhen states try to produce everything it needs by itself
low - Answersautarkic states tend to exhibit ___ growth
expensive goods/services - Answersscarce inputs = ?
cheap goods/services - Answersabundant inputs = ?
economic sanctions - Answersa type of economic pressure; the economic and financial penalties applied
by one or more states against another state, group, or individual
economic warfare - Answersa type of economic pressure; an attack on another country's economy to
weaken the other state's military capabilities and military production
trade wars - Answersa state threatens to inflict economic harm in order to persuade a target state to
agree to terms of trade more favorable to the coercing state
smart sanctions - Answerswhen states target individuals and groups over the entire state
embargo, tariff, non-tariff barrier - Answersexamples of sanctions
rally-around-the-flag effect - Answersincreased short-run popular support of a country's government or
political leaders during periods of international crisis (such as sanctions) or war; can be created by
sanctions
the second state can find other partners - Answersthe existence of world markets may reduce the
leverage that one state can exert over another in economic affairs because ______.
cartel - Answersan association of producers or consumers (or both) of a certain product, formed for the
purpose of manipulating its price on the world market; form to manipulate the price of a certain
product, and most often limit production by each member so as to lower supply; example is the
organization of the petroleum exporting countries (opec)
world trade organization - Answersreplaced the general agreement on tariffs and trade in 1995;
framework relies on reciprocity
trade without discrimination, fair competition, economic development, predictability, freer trade -
Answersgoals of the world trade organization
