e2 Key Economic and International Relations Concepts

A collection of flashcards that covers essential vocabulary and concepts in economics and international relations.

Exchange rate

The price at which one currency is exchanged for another.

Appreciate

To increase in value relative to other currencies.

Depreciate

To reduce the value of one currency relative to other currencies.

Monetary policy

An important tool of national governments to influence broad macroeconomic conditions such as unemployment, inflation, and economic growth.

Central bank

The institution that regulates monetary conditions in a country’s economy.

Fixed exchange rate

An exchange rate policy under which a government commits itself to keeping its currency at or around a specific value relative to another currency.

Gold standard

A monetary system in which countries tied their currencies to gold at a legally fixed price.

Floating exchange rate

An exchange rate policy where a government permits its currency to be traded on the open market without direct government control.

Bretton Woods monetary system

The monetary order negotiated among the WWII allies in 1944 based on a US dollar tied to gold.

Adjustable peg

A monetary system of fixed but adjustable rates where governments can adjust their exchange rate from time to time.

International monetary regime

A formal or informal arrangement shared by most countries to govern relations among their currencies.

Portfolio investment

Investment in a foreign country via the purchase of financial instruments without managerial control.

Sovereign lending

Loans from private financial institutions in one country to sovereign governments of other countries.

Foreign direct investment (FDI)

Investment in a foreign country through acquisition or establishment of a facility with managerial control.

World Bank

An international institution that provides loans at below-market interest rates to developing countries.

Recession

A sharp slowdown in the rate of economic growth and economic activity.

Depression

A severe downturn in the business cycle with major declines in economic activity.

Default

To fail to make payments on a debt.

Austerity

The application of policies to reduce consumption by cutting government spending and raising taxes.

Bank for International Settlements

One of the oldest international financial organizations established in 1930.

International Monetary Fund (IMF)

An international economic institution established in 1944 to manage international monetary relations.

Multinational corporation (MNC)

An enterprise that operates in multiple countries with production facilities outside its origin country.

Global supply chains

A network of customers and suppliers involved in the production and distribution of a product.

Bilateral investment treaty

An agreement between two countries about the conditions for private investment across borders.

Less developed countries (LDCs)

Countries at a relatively low level of economic development.

Infrastructure

Basic structures necessary for social activity, such as transportation and telecommunications.

Primary products

Raw materials and agricultural products that are typically unprocessed.

Oligopoly

A situation in which a market is dominated by a few firms.

Terms of trade

The relationship between a country's export prices and its import prices.

Import-substituting industrialization (ISI)

Policies to reduce imports and encourage domestic manufacturing, often through trade barriers.

Export-oriented industrialization (EOI)

Policies to spur manufacturing for export through subsidies and incentives.

Group of 77

A coalition of developing countries in the UN formed in 1964 advocating for economic changes.

Commodity cartels

Associations of producers that restrict world supply of commodities to raise prices.

International law

A body of rules that binds states and other agents in world politics.

International humanitarian laws

Rules that seek to limit effects of armed conflict and protect noncombatants.

Customary international law

Law that develops slowly over time as states recognize practices.

Obligation

The degree to which states are legally bound by an international rule.

Precision

The degree to which international legal obligations are clearly specified.

Delegation

The degree to which third parties are given authority to implement international legal rules.

Norms

Standards of behavior that define what actions are 'right' under particular circumstances.

Norms entrepreneurs

Individuals or groups that seek to advance principled standards of behavior for states.

Transnational advocacy network (TAN)

A set of individuals and NGOs acting in pursuit of a normative objective.

Norms life cycle

A model describing how norms diffuse and achieve acceptance.

Private authority

Legitimate rule-making by nonstate actors in international affairs.

Boomerang model

A process by which NGOs can activate transnational linkages to pressure their governments.