Working in a Global Economy

What is the global economy?

The worldwide system of countries trading goods, services, and money.

What is globalization?

The process of countries becoming more connected and dependent on one another for trade.

Who participates in the global economy?

Almost every country that uses currency.

Who may be excluded from the global economy?

Local communities that still rely on barter instead of money.

What is barter?

Trading goods or services directly without using money.

Why do wealthy countries manufacture products in developing countries?

Labor costs are often lower.

What are two benefits of overseas manufacturing?

It creates jobs in developing countries and can lower consumer prices.

How can overseas manufacturing help developing economies?

Workers earn wages and spend them in their local economies.

What are two drawbacks of overseas manufacturing?

Factory job losses in developed countries and potentially low pay or unsafe conditions overseas.

What does interconnected mean in a global economy?

An economic event in one country can quickly affect other countries.

What does interdependent mean?

Countries rely on one another for materials, products, and customers.

What does expansive mean?

Global trade continues growing and reaching more parts of the world.

What does borderless mean?

Money, information, and products move across international borders.

What does high-tech mean in a global economy?

It relies on digital tools, modern shipping, and global logistics.

What is the Golden Arches Theory?

The idea that countries with McDonald's restaurants do not go to war with one another.

Why is the Golden Arches Theory relevant to globalization?

McDonald's can indicate stability and strong global business connections, though war can still occur.

What was Brexit?

The United Kingdom's 2016 vote to leave the European Union.

Why did supporters want Brexit?

They wanted the UK to make its own laws rather than follow EU rules.

What is xenophobia?

Fear or dislike of foreign people, things, or unfamiliar cultures.

What is the global marketplace?

The worldwide arena where countries and companies trade goods, services, and money.

What is a global business?

A company that sells products, hires workers, or operates in multiple countries.

What are economic conditions?

How healthy an economy is, based on factors such as jobs, spending, and production.

What is GDP?

The total dollar value of all goods and services a country produces in a year.

What is inflation?

A sustained rise in prices that reduces what money can buy.

What is a recession?

A period when the economy shrinks and business activity slows.

What is the role of a central bank in the economy?

It uses interest rates to influence borrowing, spending, investment, and economic growth.

What happens when a central bank lowers interest rates?

Borrowing becomes cheaper, encouraging people and businesses to take loans.

How can lower interest rates increase employment?

More spending and investment can help businesses expand and hire workers.

How can increased demand contribute to inflation?

When demand rises, prices may increase.

How can high prices slow the economy?

People may buy less, businesses may earn less, and layoffs can occur.

How can a U.S. economic slowdown affect other countries?

The U.S. may buy fewer imports, reducing sales for businesses abroad.

What is an exchange rate?

The value of one country's currency compared with another's.

What is a floating exchange rate?

A currency value that changes with supply and demand.

What can happen to a currency when its economy strengthens?

Its value may rise under a floating exchange rate.

What is a fixed exchange rate?

A currency value pegged to another currency so it follows that currency's value.

What is the difference between floating and fixed exchange rates?

Floating rates change with market supply and demand; fixed rates are pegged to another currency.

How are countries interconnected and interdependent?

Events in one country affect others, and countries rely on each other for goods, materials, and customers.