Ipe Midterm

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Mercantilism

Back 1

maintained that the most important way for a nation to become rich and powerful was to export more than it would import. Advocated that exports be stimulated and imports be restricted.

Front 2

Adam Smith

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Was against the mercantilist view on trade and advocated free trade instead as the best policy for the nations of the world.

Front 3

David Ricardo

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Stated that even if a nation had an absolute disadvantage in the production of both commodities with respect to the other nation, mutually advantageous trade could still take place. Argued that the less efficient nation should specialize in the production of and export of the commodity in which its absolute disadvantage is less.

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Macroeconomics

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Having to do with the whole or the aggregate of an economy, such as the total receipts and payments of a nation and the general price index.

Front 5

Labor Theory of Value

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A theory purporting that the value or price of a commodity is equal to or can be inferred from the amount of labor time going into the production of the commodity.

Front 6

Law of comparative advantage

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This law governing trade states that even if a nation has an absolute disadvantage or is less efficient than another nation in the production of commodities, there is still a basis for mutually beneficial trade if the less efficient nation specializes in the production of, and exports, the commodity of its smallest absolute disadvantage (comparative advantage) and exchanges part of its output for the other commodities.

Front 7

Absolute advantage

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The greater efficiency that one nation may have over another in the production of a commodity. According to Adam Smith, this is the basis for trade.

Front 8

Macroeconomics

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the study of the aggregate behavior of economic aggregates, such as level of output, price level, and growth of output.

Front 9

GNP (Gross National Product)

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Total revenue produced within a nation including income from citizens living abroad.

measures the current market value of all final goods and services produced in an economy during a one-year period. When GNP is measured instead in constant dollars by holding the price level constant, constant-dollar GNP (real GNP) is a measure of real output

Front 10

GDP (Gross Domestic Product)

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Total revenue produced in a country plus the value of exports minus imports

Front 11

Microeconomics

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analyzes household and firm behavior to understand the determinants of price and output in individual markets

Front 12

Aggregate economic behavior

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The sum of individual behavior. Aggregate consumption depends not only upon the behavior of individual units but upon the importance of each behavioral unit.

Front 13

Warsaw Pact

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A military alliance of communist nations in eastern Europe. Organized in 1955 in answer to NATO, the Warsaw Pact included Albania, Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, Romania, and the Soviet Union. It disintegrated in 1991, in the wake of the collapse of communism in eastern Europe and the Soviet Union.

Front 14

Pax Britannica

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it was was the period of relative peace in Europe (1815–1914) when the British Empire controlled most of the key naval trade routes and enjoyed unchallenged sea power. It refers to a period of British imperialism after the 1815 Battle of Waterloo, which led to a period of overseas British expansionism. Britain dominated overseas markets and managed to influence and almost dominate Chinese markets after the Opium Wars.

Front 15

Peace of Westphalia

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The Peace of Westphalia was a treaty agreement between Spain and the Dutch in 1648. This agreement put an end to the Thirty Years' War.
The peace of Westphalia is recognized to be the beginning of modern international relations based on the recognition of state sovereignty. Westphalia recognized sovereignty of Netherlands and German states which meant that Europe would not unite under an emperor

Front 16

League of Nations

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The league of Nations was designed by Woodrow Wilson of America to try and ensure peace and that another world war didn't start. It was made up of 63 countries and met once a year to solve issues without using military force

Front 17

NATO (North Atlantic Trade Organization

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established by the US and Western Europe following World War II. It originally consisted of twelve countries: the United States, Canada, Britain, France, Italy, Belgium, Denmark, Portugal, the Netherlands, Norway, Luxembourg, and Iceland. These countries agreed to come to the aid of any member who was attacked, and represented a common front against any territorial expansion by the USSR and the Warsaw Pact.

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Federal Reserve System (aka the Fed)

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The Federal Reserve System, often referred to as the Federal Reserve or simply "the Fed," is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system. The Federal Reserve was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law.

Front 19

The Bretton Woods System

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Under the Bretton Woods system, central banks of countries other than the United States were given the task of maintaining fixed exchange rates between their currencies and the dollar. They did this by intervening in foreign exchange markets. If a country's currency was too high relative to the dollar, its central bank would sell its currency in exchange for dollars, driving down the value of its currency.

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Hegemony

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Hegemony is when one entity has a disproportionate amount of influence on political affairs. Today, the United States is very nearly the world hegemon, although it has become much more difficult to be the hegemon in today's globalized community

Front 21

Gold standard

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The gold standard is a system in which international currencies are tied to a specific amount of gold. At the turn of the 20th century, many major trading nations used the gold standard to adjust their monetary supply.

Front 22

Treaty of Versailles

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The Treaty of Versailles was the peace treaty which officially ended World War I. It was signed by foreign German minister Hermann Müller. The armistice to end the fighting of WWI had been signed on 11 November 1918, but the Treaty of Versailles was the result of six months of negotiations at the Paris Peace Conference to conclude the terms of the peace treaty. The Treaty required that Germany accept sole responsibility for causing the war and that it make reparations to certain members of the Allied forces.

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John Keynes

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1. Markets (particularly unregulated markets) are inherently unstable.
2. The result can be large scale unemployment.
3. Since unemployment causes a decrease in spending, business and banks pull in their horns and there are more layoffs and credit is unavailable – creating a vicious cycle. (We are experiencing that now with tons of money sitting on the sidelines and no one spending it – banks refusing to lend etc.)
4. According to Keynes, if banks won’t lend and industry won’t create jobs – the government must step in and pour money into the system to reignite the economy.

Front 24

John Stewart Mills

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A british philosopher economist, moral and political theorist, and administrator. The overall aim of his philosophy is to develop a positive view of the universe and the place of humans in it, one which contributes to the progress of human knowledge, individual freedom and human well-being.

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Opportunity Cost

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The value of the best alternative that must be given up to pursue an activity

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3 levels of analysis for studying IPE

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International, Domestic, Transitional

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International

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The reps of states with different interests interact with one another, sometimes in the context in international institutions such as the UN or WTO.

Front 28

Domestic

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Subnational actors with different interests-politicians, bureaucrats, business and labor groups, voters- interact within domestic institutions to determine the country's foreign policy choices.

Front 29

Puzzles

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observations about the world that demand an explanation (war, environmental protection)

Front 30

Actors

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The basic unit for the analysis of international politics; can be individuals or groups of people with common interests.

Front 31

State

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A central authority with the ability to make and enforce laws, rules, and decisions within a specific territory.

Front 32

Interactions

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The ways in which the choices of two or more actors combine to produce political outcomes. two assumptions of interactions:

1. actors are purposive; they behave with the intentions of producing a desired result.
2. actors adopt strategies to obtain desired outcomes given what they believe is in their best interest.

Front 33

Bargaining

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an interaction in which actors must choose outcomes that make one better off at the expense of another. Bargaining is redistributive; it involves allocating a fixed sum of value between different actors.

Front 34

Cooperation

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An interaction in which two or more actors adopt policies that make at least one actor better off relative to the status quo without making others worse off.

Front 35

Free Ride

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To fail to contribute to a public good while benefiting from the contribution of others.

Front 36

Linkage

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The linking of cooperation on one issue to interactions on a second issue. This allows victims to retaliate by withholding cooperation on other issues.

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Coercion

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The threat or imposition of costs on other actors in order to change their behavior. Means of international coercion include military force, economic sanctions, and embargos.

Front 38

Power

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The ability of actor A to get actor B to do something that actor B would otherwise not do; the ability to get the other side to make concessions and to avoid having to make concessions oneself.

Front 39

Outside Option

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The alternatives to bargaining with a specific actor that are more attractive than the status quo. Makes walking away from the bargaining table easier.

Front 40

Business Cycle

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Fluctuations in economic activity; expansion v. recession

Front 41

National Interests

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Interests attributed to the state itself; usually security and power.

Front 42

Coordination

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a type of cooperation interaction in which actors benefit from all making the same choices and subsequently have no incentive to not comply.

Front 43

Collaboration

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A type of cooperative interaction in which actors gain from working together but nonetheless have incentives to not comply with any agreement; prisoner's dilemma.

Front 44

Public Goods

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Individually and socially desirable goods that are non excludable and non rival in consumption, such as national defense.

Front 45

Collective Action Problems

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Obstacles to cooperation that occur when actors have incentives collaborate but each acts in anticipation that others will pay the costs of cooperation; public goods.

Front 46

Sovereignty

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The expectation that states have legal and political supremacy - or ultimate authority - within their territorial boundaries.

Front 47

Decolonization

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The process of shedding colonial possessions, especially the rapid end of the European empires in Africa, Asia, and the Caribbean between the 1940's and the 1960's.

Front 48

3 Levels of Analysis in Studying IPE Interactions

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International, Domestic, Transnational

Front 49

International

Back 49

The representatives of states with different interests interact with one another, sometimes in the context in international institutions such as the UN or WTO.

Front 50

Domestic

Back 50

Subnational actors with different interests - politicians, bureaucrats, business and labor groups, voters - interact within domestic institutions to determine the country's foreign policy choices.

Front 51

Transnational

Back 51

Groups whose members span borders (Multinational corporations, transnational advocacy networks, terrorist organizations) pursue interests by trying to influence both domestic and international politics.

Front 52

International Political Economy

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The study of politics of economic actions and the economics of political actions; the ways the government policies affect market operations, and ways the economic forces mold government policies.