Chapter 10 - International Relations

Convertible currency

A currency that can be exchanged at market price for the currency of another country.

Invisible hand

A term coined by Adam Smith to describe the uncoordinated behavior of individuals and firms acting in their own selfish interest in the marketplace.

Absolute gains

The idea that economic interactions create gains for all, even if some gain more than others. Contrasts with relative gains.

Keynesian liberalism

A version of liberal economic thought that emphasizes the role governments must play in managing their national economies.

Neo-liberalism

A version of liberalism that emphasizes the importance of less regulated markets, especially in finance.

Sensitivity

A state is sensitive to another state's actions if those actions can temporarily hamper a state until it finds a replacement for the good or service from another location.

Vulnerability

A state is vulnerable to another state's actions if it is unable to compensate effectively for losses caused by the other state's actions.

Weaponized Interdependence

The use by one country of its control over global or regional economic networks to coerce politically a state or states dependent on those networks.

Hegemonic Stability Theory

A theory that predicts a dominant liberal state will use its power and influence to construct an open world economy.