Economics Test 2 Week 7&8
Terms
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copy deck
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When was the gold standard implemented?
What was it? -
1870-1914
countries fixed price of gold, implicit (understood)exchange rate system - When and What is the interwar period?
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1918-1939
economic consequences of the peace, gold standard restored, monetary nationalism - The Bretton Woods Conference developed:
- International monetary fund, international bank for reconstruction and development (world bank), World Trade ORganization (GATT)
- Who were the two main men that contributed to the Bretton Woods Institutions?
- John Maynard Keynes & White
- When was the Bretton Woods system implemented? What?
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1945-1971
gold exchange standard, US fixed price of gold, other countries fixed their exchange rates to the dollar -
Bretton Woods Conference seeks to: Rebuild ______ and ____
_____ ______ is created -
Western Europe and Japan
World Bank is created. -
Bretton Woods Conference seeks to: Insure _____ _______ ______
______ ________ _________ is created to oversee the Gold Exchange system -
stable exchange rates,
International Monetary Fund - Bretton Woods Conference seeks to: Reduce ______ ______ barriers.
- GLOBAL TRADE Barriers
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Reduce Global trade barriers:
_____ ______ _____ is proposed,
instead _____ is created, _____ ____ ____ created in 1995 by the Uruaguay Round negotiations (86-94) - International Trade Organization, GATT, WORLD TRADE ORGANIZATION
- World Bank's identity crisis in the late 1950's?
- Rebuilding of Europe and Pacific is done, turns attention to developing nations & helps poor countries grow and develop
- IMF's identity crisis after 1973?
- Turns to offering financial assistance and advice to countries who run "balance of payments difficulties", seeks to become world's largest credit union while offering help during times of financial crises
- GATT (General Agreement on Tariffs and Trade) gets bigger and bigger and has difficulties over....
- agriculture, intellectual property and services
- World Bank Successes: rebuilt ____ ______ after WWII
- Western Europe
- Assisted _____ _____ after 1950's "Police Action)
- South Korea, rebulit poor agriculture into an industrial advanced country
- The ____ ____ in agriculture has reduced the incidence of famine around the world
- Green Revolution, spreading knowledge and technology around the world to farmers and food producers
- World Bank encouraged economic development through
- industrialization
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Issues with World Bank:
World Bank often stressed _____ _____ policies - import substitution
- WOrld bank issues: Block ____ with trade barriers and support creation of new domestic industries with _____ ____ subsides
- imports, infant industry
- World bank issues: Result of blocking imports & infant industry subsides...
- inefficient protected domestic industries
- Issues with World bank: _____ on government planned economic growth programs.
- Overemphasis, policy suggestions result in growing government bureaucracy
- Who pays for the bureaucracy?
- government debt, internal political fights over who gets the WOrld Bank money
- Is the World Bank too expensive?
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Why is Africa so poor, so sick, and so unstable despite the billions of world bank money spent there?
Well paid world bank "consultants" - IMF Successes: IMF helped to expand ____ ____ through out the 1950s and 60s
- global trade
- IMF non political policy suggestions
- provides discipline over politically driven policies
- IMF encourages movement toward
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market economies with
1. reduction of trade barriers
2. reduction in government budget deficits
3. financial market refor - IMF offers
- financial advice along with assistance
- Issues with IMF: Debt crises of the 1980s
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IMF and commercial banks
IMF and large lender countries - Issues with IMF: Washington Consensus
- a formula for promoting economic growth in many parts of Latin America and other parts of the world by introducing various market-oriented economic reforms which are designed to make the target economy more like that of First World countries such as the United States
- Issues with IMF: Currency crises of the 1990s
- interest rate defense, supply side policies, asia and Russia
- GATT/WTO problems: Rise of ____ _____
- TRADING BLOCS, free trading agreements, undermines GATT/WTO purpose
- GATT/WTO issues: Concerns of _____ countries are addressed, while _____ nations concerns are ignored
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richer, poorer
intellectual property v. agricultural subsidizes - GATT/WTO Problems: failure of the __________ Round
- "Development"
- Meltzer Commission Report of 2000 suggested: IMF
- IMF be limited to only short term lending, countries should pre qualify for IMF assistance, penalty interest rate borrowing from the IMF
- Meltzer Commission Report of 2000: WORLD BANK, grants
- Should provide grants not loans, grant decisions and oversight should be decentralized, more grants only if progress shown
- Meltzer Commission: WOrld Bank, asssitance
- Should limit it's assistance to the poorest of poor countries, less poor countries should get funding from the global financial markets
- Meltzer Commission: World Bank, past
- Outstanding debt forgiveness, admit the past was a mistake
- Main theme of the Meltzer commission
- IMF and WOrld Bank need to use today's modern global financial markets
- Meltzer Commission Report on US influence
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US state department needs to end its influence over the IMF and World Bank
controversial suggestions - Bretton Woods System: US became the deficit/surplus country?
- deficit, foreign holdings of dollars
- Bretton Woods: US became the high inflation country
- need to devalue dollar (raise price of gold) or revalue other currencies
- August 15, 1971
- US severed link with gold
- Flexible Exchange rates
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1973-2006
EMS and EURO