Money, Finance, and Business in the Global Economy

Flashcards covering key concepts from the lecture on global economy, finance, and monetary systems.

International Monetary System

A framework of rules, institutions, and practices governing currency exchange and facilitating global trade.

Gold Standard

An early international monetary system where currencies were tied to gold, facilitating predictability in currency values.

Bretton Woods System

The international monetary system established in 1944, featuring fixed but adjustable exchange rates, pegs to the US dollar.

Floating Exchange Rates

A system where currency values are determined by market forces instead of being pegged to gold or another currency.

Current Account

A component of the Balance of Payments that includes transactions related to trade, primary income, and secondary income transfers.

Gross Domestic Product (GDP)

The total monetary value of all goods and services produced within a country's borders over a specific period.

Gross National Income (GNI)

The total income earned by residents and businesses of a country, including income from abroad.

Foreign Direct Investment (FDI)

Long-term investments by foreign entities in a country's productive assets, such as factories or infrastructure.

Portfolio Investment

Investment in foreign financial assets like stocks and bonds, seeking higher returns or diversification.

Quantitative Easing (QE)

A monetary policy where central banks purchase long-term securities to inject money into the economy.

Lender of Last Resort

The role of central banks to provide emergency funding to financial institutions in times of crisis.

Financial Globalization

The increasing interdependence of national financial systems, allowing for the free movement of capital and investment.

Capital Flight

The rapid withdrawal of investments from a country due to loss of confidence in its economy.

Balance of Payments (BoP)

A record of all economic transactions between a country and the rest of the world, consisting of the current and capital accounts.

Debt Restructuring

Modifying the terms of repayment to ease the debt burden, such as extending maturity or reducing interest rates.

US Dollar (USD)

The dominant currency in international trade and the world's primary reserve currency held by central banks.

Cryptocurrencies

Digital currencies that operate on decentralized networks, offering alternatives to traditional fiat currencies.

COVID-19 Pandemic

A global economic shock starting in 2020 that disrupted economies, led to major fiscal interventions, and accelerated digital transformation.

Austerity Programs

Economic policies aimed at reducing government deficits through spending cuts and increased taxes, often mandated as conditions for IMF loans.