Global Economics, Geopolitics, and Macroeconomic Policy Flashcards

Vocabulary flashcards covering topics in global geopolitics, national account variables, fiscal policy models, and central bank monetary mechanisms.

Liberal International Order (1945–2008)

A post-World War II global framework shaped by the United States through multilateral institutions like the UN, IMF, World Bank, and WTO, promoting open markets, rules-based trade, and collective security.

America First Policy Directive

A U.S. foreign policy posture that prioritizes domestic economic, industrial, and strategic interests over multilateral commitments through protectionist tariffs, reshoring supply chains, and bilateral leverage.

One Big Beautiful Bill Act (OBBBA)

A U.S. domestic tax and spending package intended to revive domestic manufacturing, increase military spending, and reshore supply chains, reflecting an inward policy pivot.

Monroe Doctrine

A U.S. foreign policy precedent established on December 2, 1823, declaring the Western Hemisphere a U.S. strategic sphere of interest to limit external power influence.

U.S. National Security Strategy (NSS 2025)

A strategic security framework reorienting focus from the Middle East to the Indo-Pacific while establishing the Western Hemisphere as a core security perimeter to deny rival foreign powers control over critical assets.

Orinoco Belt

A major geographic deposit in Venezuela containing vast reserves of heavy to extra-heavy sour crude oil that requires complex deep-conversion refineries to process into refined fuels.

EU-Mercosur Free-Trade Agreement

A strategic trade deal creating an integrated market of 780 million consumers, removing duties on 91% of EU goods exported to Mercosur, and saving EU exporters ‐4 billion annually.

Important Projects of Common European Interest (IPCEIs)

A key EU framework for public-private joint investments aimed at advancing cross-border industrial policies and critical technological innovations across member states.

European Chips Act

A flagship EU industrial initiative targeting an increase in Europe's global semiconductor manufacturing market share from approximately 10% to 20% by 2030.

Theory of Optimal Currency Areas

Robert Mundell's 1961 economic framework stating that a successful currency union requires trade integration, labor and capital mobility, synchronized business cycles, and fiscal risk-sharing mechanisms.

NextGenerationEU (NGEU)

An ‐800+ billion temporary recovery package approved in 2020 that marked the first instance of the European Commission issuing common debt on capital markets to fund member state reforms and investments.

Gross National Product (GNP)

The total market value of all final goods and services produced in a given year by factors of production owned by domestic citizens, regardless of location.

Gross Domestic Product (GDP)

The total market value of final goods and services produced within a country's geographic borders during a year, represented by the expenditure formula $GDP = C + I + G + (X - M)$.

National Income (NI)

The gross remuneration earned by all productive factors in an economy over a year, calculated as $NI = GNP - "Depreciation of capital" - "Indirect Taxes" + "Subsidies"$.

Disposable Income ($Y_d$)

The net income available to households after direct taxes and public transfers, partitioned into private consumption ($C$) and private saving ($S_p$): $Y_d = C + S_p$.

Components of Income Per Capita

The decomposition of GDP per capita into three multiplicative components: labor productivity, work intensity, and the labor market participation rate.

Consumer Price Index (CPI)

A statistical weighted average price level of a basket of consumer goods and services relative to a base year, used to measure inflation using $"\pi_t" = \frac{CPI_t - CPI_{t-1}}{CPI_{t-1}} \times 100$.

Core Inflation

The rate of aggregate price increases calculated after excluding volatile components such as unprocessed food, imported raw materials, and fuel.

Hyperinflation

An extreme, rapid inflation spiral where the price level increases exponentially, typically defined as exceeding 50% monthly or 10% annually.

Current Account (CA) Balance

The component of the Balance of Payments tracking settled real transactions within the reference period, including trade in goods, services, net investment income, and current transfers.

Financial Account (FA) Balance

The section of the Balance of Payments tracking international flows of capital and ownership rights, including Foreign Direct Investment (FDI), portfolio holdings, loans, and central bank foreign exchange reserves.

Primary Budget Deficit

The total government spending minus total tax revenues, calculated without including government interest payments on existing debt.

Government Revenue Structure

The taxonomy categorizing government inflows into grants and non-grants, with non-grants split into tax revenues (direct and indirect taxes), non-tax revenues, and social security contributions.

Risk Premium

The extra yield margin demanded by bond investors to purchase a sovereign debt security perceived to have higher default risk relative to a benchmark risk-free bond.

Expansionary Fiscal Policy

A public policy approach increasing government spending ($G$), increasing transfers ($TR$), or cutting tax rates ($t$) to stimulate aggregate demand and lower unemployment.

Autonomous Spending ($A$)

The aggregate spending component independent of current domestic income level, defined algebraically as $A = \bar{C} + c\,TR + \bar{I} + G$.

Spending Multiplier

The quantitative factor reflecting how much equilibrium output ($Y^*$) changes per unit change in autonomous spending, equal to $\frac{1}{1 - c(1 - t)}$.

Automatic Stabilizers

Built-in budget features like progressive income taxes and unemployment benefits that automatically adjust tax collection and public payouts during economic downturns.

Monetary Base ($MB$)

The total direct monetary liabilities of a central bank, composed of physical currency in circulation ($C.C.$) plus commercial bank reserves ($R$).

Reserve Coefficient

The ratio of liquid cash and central bank deposits held by a commercial bank relative to its total customer deposits.

Money Supply Measure M3

The comprehensive monetary aggregate tracked by central banks, consisting of currency in circulation, overnight deposits, short-term deposits, repurchase agreements, and money market instruments.

Quantity Theory of Money

The classical macroeconomic theory expressed by Fisher's equation $M \times v = P \times Y$, asserting that money growth exceeding real GDP growth generates inflation in the long run.

Open Market Operations (OMOs)

The central bank technique of purchasing or selling public debt securities in secondary markets to alter systemic liquidity and manage money supply ($M$).

Quantitative Easing (QE)

An unconventional monetary tool involving large-scale purchases of government and private debt by a central bank to lower borrowing yields across the economy when interest rates reach the zero lower bound.