Globalization Final Exam

Gold Standard

• Who: Major industrial economies (UK, US, Europe)

• What: Currency value tied to a fixed amount of gold

• When: 19th century–1930s

• Where: Europe and North America

• Why: To stabilize currencies and facilitate trade

• Significance: Promoted global trade but limited governments’ ability to respond to crises

“Floating” Currency

• Who: National governments and central banks

• What: Currency value determined by supply and demand

• When: Post-1971

• Where: Most global economies

• Why: To allow market flexibility

• Significance: Increased financial globalization and currency volatility

Fiat Currency

• Who: Governments

• What: Money backed by government trust, not commodities

• When: Widely adopted after 1971

• Where: Global

• Why: Allows flexible monetary policy

• Significance: Foundation of modern global finance

Inflation

• Who: Consumers, governments, central banks

• What: Rise in general price levels

• When: Persistent issue in modern economies

• Where: Global

• Why: Often due to excess money supply

• Significance: Affects purchasing power and trade competitiveness

Hyperinflation

• Who: Governments and citizens

• What: Extremely rapid inflation

• When: Notably 20th century (e.g., Weimar Germany)

• Where: Various countries

• Why: Economic collapse or excessive money printing

• Significance: Can destroy economies and destabilize global markets

Tariff

• Who: Governments

• What: Taxes on imported goods

• When: Used historically and today

• Where: Global trade systems

• Why: To raise revenue or protect industries

• Significance: Can restrict or shape globalization

Subsidy

• Who: Governments

• What: Financial support to industries or consumers

• When: Common in modern economies

• Where: Global

• Why: To encourage production or affordability

• Significance: Can distort global trade and cause disputes

Protectionism

• Who: Governments

• What: Policies restricting imports to protect domestic industries

• When: Especially common during economic downturns

• Where: Global

• Why: To protect jobs and industries

• Significance: Can limit globalization and provoke trade conflicts

Federal Reserve

• Who: United States central bank

• What: Controls US monetary policy

• When: Founded in 1913

• Where: United States

• Why: To stabilize banking and currency

• Significance: Major influence on global financial markets

Independent Central Bank

• Who: Central banks (e.g., ECB, Fed)

• What: Operates free from political pressure

• When: Late 20th century

• Where: Many developed economies

• Why: To ensure stable monetary policy

• Significance: Builds investor confidence in global markets

IMF

• Who: International organization

• What: Provides financial assistance and oversight

• When: Founded in 1944

• Where: Global

• Why: To stabilize currencies and prevent crises

• Significance: Central to global financial stability

World Bank

• Who: International organization

• What: Provides loans and aid for development

• When: Founded in 1944

• Where: Global

• Why: To reduce poverty and rebuild economies

• Significance: Key institution in economic globalization

Bretton Woods

• Who: 44 Allied nations

• What: Conference creating postwar financial system

• When: 1944

• Where: New Hampshire, USA

• Why: To stabilize global economy after WWII

• Significance: Created IMF and World Bank

Collective Security

• Who: Nations and international organizations

• What: Agreement to respond collectively to threats

• When: After World War I and II

• Where: Global (e.g., UN, NATO)

• Why: To prevent conflict

• Significance: Supports political globalization and international cooperation

Capital

• Who: Investors, banks, governments

• What: Money or assets used to generate wealth

• When: Especially important since Industrial Revolution

• Where: Global

• Why: To fund production, trade, and development

• Significance: Free movement of capital is a core feature of globalization

Monetary Policy

• Who: Central banks

• What: Control of money supply and interest rates

• When: Modern era

• Where: National economies

• Why: To manage inflation and economic growth

• Significance: Impacts global markets and international investment

Gross Domestic Product (GPD)

• Who: Economists and governments

• What: Total value of goods and services produced

• When: 20th century–present

• Where: All countries

• Why: To measure economic performance

• Significance: Standard global indicator of economic strength