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66 Cards in this Set
- Front
- Back
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what is the capital of Japan? |
Tokyo |
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Tokyo population |
9 million |
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Tokyo population if you include workforce |
nearly 40 million |
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economic size of Japan? |
free market economy with free floating currency system |
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current GDP of Japan |
$4.9 trillion |
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top 3 largest GDPs in the world |
1. US 2. China 3. Japan |
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japan's GDP per capita |
$38,500 |
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japan is the _____ richest country in the world |
23rd |
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Leaders of Japan? |
1. Prime minister: Shinzo Abe 2. Emperor Akihito |
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Japan's currency? |
Japanese Yen (JPY) |
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Notable Exports in Japan (5) |
1. vehicles 2. machinery 3. electronic equipment 4. optical, technical and medical apparatus 5. iron and steel |
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How do we model exchange rates? |
we model them on supply and demand curves, which are determined by the market |
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why do free floating currencies appreciate or depreciate? |
because it is based on the market which is constantly changing |
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when supply of a currency ______ its demand decreases thus _______ its value |
1. increases 2. decreasing |
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When supply if a currency _____ demand increases thus _______ its value |
1. decreases 2. increasing |
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An increase in demand for a currency can drive the ______ up as well |
price |
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some of the major shifts in supply and demand that can change the value of a country's currency (3): |
1. relative interest rates ( short term) 2. relative inflation rates (long term) 3. relative GDP growth rates (medium term) |
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what does it mean to say a currency is over valued or under valued? |
Exchange rate is too high or too low |
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How do exchange rates adjust over time when a currency is over or under valued? |
if pesos are undervalued and dollars are overvalued, Mexicans will demand fewer US goods and Americans will buy more Mexican goods. Decrease in demand for dollars (Mexico) and increase in supply of dollars (America) |
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How does a rising or falling currency affect consumers? (3) |
1. imports become cheaper when the domestic currency appreciates 2. imports become more expensive when the domestic currency depreciates 3. domestic country's currency appreciates with higher domestic interest rates, decrease in domestic inflation rates and an increase in foreign wealth |
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For firms, exports become more _____ when the domestic currency appreciates |
expensive |
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for firms, exports become _____ when the domestic currency depreciates |
cheaper |
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For firms, foreign inputs become _____ when the domestic currency appreciates |
cheaper |
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For firms, foreign inputs become _________ when the domestic currency depreciates |
more expensive |
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Output and GDP ___ when the domestic currency appreciates |
fall |
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Output and GDP ___ when the domestic currency depreciates |
rise |
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Top 5 currencies traded most in the FX market? |
1. US dollar 2. Euro 3. Japanese Yen 3. Pound 4. Australian dollar |
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Why would a country peg its currency to another country's currency? (2) |
1. smaller economies can sometimes maintain price stability (fight inflation) by tying their currency to the value of a larger, more stable currency 2. can create a more stable trading environment between 2 countries |
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How does a country carry out pegging its currency to another country's currency? |
the country's central bank uses an open market mechanism and is committed at all times to buy/sell its currency at a fixed price in order to maintain its pegged ration and the stable value of its currency in relation to the reference to which it is pegged. |
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If a pegged country's currency appreciates, what do they do? |
they buy more US dollars (or whatever currency they are pegged to) in order to drive the price of their currency back down |
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if a pegged country's currency depreciates, what do they do? |
They will sell US dollars (or whatever they are pegged to) in exchange for more of their own currency in order to increase demand |
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currency for Australia |
Australian dollar |
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currency for brazil |
brazilian real |
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currency for canada |
canadian dollar |
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currency for china |
chinese yuan |
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currency for england |
british pound |
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currency for hong kong |
hong kong dollar |
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currency for india |
indian rupee |
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currency for japan |
japanese yen |
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currency for mexico |
mexican peso |
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currency for russian fed. |
ruble |
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currency for singapore |
singapore dollar |
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currency for south korea |
S. korean won |
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currency for switzerland |
swiss franc |
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currency for taiwan |
taiwan dollar |
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currency for thailand |
thai baht |
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common arguments that are used to oppose free trade? (5) |
1. some orgs that are vital to the country's success must be shielded from global competition 2. rich countries with high environmental standards will lower their standards in order to lower costs and compete 3.protects the domestic worker 4. protects against unfair labor practices 5. protects against income inequality |
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common methods of trade restriction implemented by the government (6) |
1. tariffs 2. quotas 3. embargoes 4. licenses 5. standards 6. subsidies |
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put in place specifically to make foreign goods more expensive to protect domestic industries from competition |
protective tariffs |
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a limit on the amount of goods that can be imported |
quota |
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laws or regulations that nations use to restrict imports |
standards |
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can completely stop products going to or from a country |
embargoes |
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what method of trade restriction do tariffs fall under? |
price method |
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what method of trade restriction do quotas, embargoes, licenses, and standards fall under? |
quantity method |
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2 methods of trade restriction (categories) |
1. price methods 2. quantity methods |
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what happens to welfare after a trade barrier (such as a tariff) is imposed? |
whenever a "small" country implements a tariff, national welfare falls |
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Who gains in regards to welfare when a trade barrier (such as a tariff) is imposed? |
the higher the tariff is set, the larger will be the loss in national welfare |
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Who loses in regards to welfare when a trade barrier (such as a tariff) is imposed? |
the tariff causes a redistribution of income. Produces and the recipients of government spending gain and consumers lose |
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what happens to overall total surplus from a tariff? |
total surplus goes down after a tariff is imposed resulting in deadweight loss |
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3 measures of GDP |
1. nominal/current 2. real/constant 3. PPP |
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GDP that hasn't been adjusted for inflation |
nominal/current |
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inflation-adjusted GDP that includes all goods/services produced that year |
real/constant |
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GDP converted to international dollars using the purchasing power parity rates |
PPP |
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what is the current situation of the US trade deficit? |
the US imports over $500 million more than it exports. isn't necessarily a bad thing. Means we import more than we export |
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What is the current situation of US manufacturing? |
US still makes stuff, its just high skilled items like planes and jet engines instead of lower skilled items like textiles. We have around 20% of the world's manufacturing |
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can a typical american worker in manufacturing with a relative high wage, compete globally against lower wage workers in other countries? why or why not? |
Yes. US workers have higher wages than those in other countries because they are more productive. |
