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Politics and World Economy
uco gatch
60
Political Studies
Undergraduate 3
03/11/2014
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Term
as you know, Spero and Hart identify three phases of post war international economic governance: The three institutions compromising the Bretton Woods Systems were
 Definition
The International Monetary Fund, the World Bank, and the General Agreement on Trade and Tariffs
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The bretton woods system was successful in managing international economic relations in part because
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the more powerful countries agreed on the basic goals and means of a capitalist international economic system.
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The U.S. secretary of state Cordell Hull (1933-1934) was associated with the idea that
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free trade encourages peaceful relations among nations.
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The nations that made up with the bretton woods system shared a basic outlook about the international economy that included
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assuming responsibility for employment levels, stability and growth of their economies.
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the era of interdependence differed from that of the Bretton Woods system in that
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the most important
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meanwhile, during the era of interdependence, european economies
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pursued increased integration amongst themselves
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during this period of interdependence, the russians and chinese
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pursued policies that opened their economies up to greater relationships with the west
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american leadership during the period of interdependence was characterized by
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a declining ability and willingness to bear the economic costs of that leadership
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the most recent era of "globalization" is distinctive because of
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a widespread commitment by governments to privatization
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during this era of "globalization"
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the ability of government to pursue national policy goals was increasingly called into question
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The "price-specie flow mechanism"
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assures that wage and price levels in countries on the gold standard will rise and fall in compensatory ways
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countries that enter into relationships of economic interdependence will tend to
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specialize their production on the basis of comparative advantage
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great britain inaugurated the 19th century development of a global economy by
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abolishing the corn laws
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by "virtuous circle", frieden means that
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great britain's commitment to free trade encouraged other countries to lower their own trade barriers and adopt the gold standard
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The hecksher-ohlin theorem proposes that
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under conditions of free trade, countries with lots of capital will specialize in capital-intensive production
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according to frieden, the period of european colonial expansion
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impeded the integration of colonized areas into the global economy
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a "reactionary" agricultural crop was
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a crop that required large numbers of workers who were controlled by business elites
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according to stolpher-samuelson theorem
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under conditions of free trade the most abundant factor in a nation's economic mix will achieve the most gains from trade
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because of the stolpher-samuelson theorem, one would expect that
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workers in the united states would be skeptical of free trade
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latin american nations that stayed on the silver standard in the 19th century
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saw their export profits increase because the value of their currencies fell against the currencies of gold standard countries
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world war 1 affected the international economy by
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placing the united states in a central position in the international economy
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the treaty of versailles
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identified germany as the cause of world war 1
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during the 1920's the major european economies
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attempted to return their currencies to the gold standard
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the economist john maynard keynes was known for having recognized that
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the adjustment mechanism of the 19th century gold standard did not work well in a world where wages and prices were less flexible
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one factor that reduced the flexibility of wages and prices was
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the rise of labor unions
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during the great depression that began in the late 1929
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countries that left the gold standard did better economically than countries that stayed on it.
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the "shacht plan" sought to
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revive the german economy by greater government intervention in labor, product, and financial markets.
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a country practicing economic "autarky" seeks to
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minimize its interdependence with other countries
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during the great depression, the soviet union
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industrialized under conditions of autarky
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the establishment of "social democracy" entailed
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the adoption of countercyclical demand management policies
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a crucial difference between the outcome of world war 1 and that of world war 2 is that
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after world war 1, the winners of that war punished the losers, whereas after world war 2 the winners sought to rehabilitate the losers
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the negotiations that created the bretton woods system took place between
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the united states and great britain
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the general agreement on trade and tariffs
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usered in an era of steadily declining trade barriers.
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as the bretton woods system began operating, it had the effect of
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increasing economic growth and lowering unemployment
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the united states contributed to the operation of the bretton woods system by
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providing hegemonic stability
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for developing countries during the bretton woods era,
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many achieved independence as old colonial empires were dismantled
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many developing countries, particulary in latin america, embraced economic policies that
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sought a "third way" between communism and capitalism
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the economist Raul Prebisch promoted the idea that
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countries with comparative advantages in natural resources will suffer adverse "terms of trade" with countries that export manufactured goods
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the economic experience of communist countries after world war 2 was broadly characterized by
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economic growth that focused on industrilization rather than the needs of consumers
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in communist china, the great leap forward
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turned out to be an economic disaster
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according to spero & hart, any international monetary system has three basic functions
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adequate liquidity; timely adjustment; system stability
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during the 1940's and 1950's the biggest problem facing the international monetary sytem was
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the shortage dollars
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the success of the bretton woods arrangement during this period was due in part to
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the promotion of european exports to the united states
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in 1960 occured the first "run" on the dollar, when speculators sought to exhange dollars for gold. speculators were encouraged to do this by the
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large amounts of US dollars held abroad, relative to the supply of gold held by the united states
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under the bretton woods system, a "special drawing right" was
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an artificial international reserve unit created by the IMF
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"eurocurrency" refers to
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national currencies that are held and traded outside their home country
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the "nixon shock"
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meant that dollars were no longer freely convertible into gold
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the "debt crisis" of the 1980's was made possible by
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the lending of surplus oil revenues through the international banking system
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evidence for the expansion of the internaional finanical system before 1989 can be found in
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the increase in the value of world financial flows relative to trade flows
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"monetarism" refers to
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government policies that focused on the size and growth of certain monetary aggregates
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the term "embedded liberalism" refers to the
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the acceptance by business interests of an interventionist government in return for the maintenance of free markets
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the year 1958 was an important one in the history of the bretton woods system because that was when
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the major member countries restored their currencies to full convertibility
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the bretton woods system came under stress by the end of the 1960's because
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the americans were unwilling to make the economic sacrifices necessary to restore confidence in the value of the dollar
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the year 1971 was significant in the history of the bretton woods system because that was when
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the United States "closed the gold window
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the international economy of the 1970's was characterized by
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both high inflation and high unemployment
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the term petrodollar "recycling refers to
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lending by the oil producing countries to oil importing countries
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economic policies of the major countries in the 1970's are best described as
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less coordinated and more self-interested than before
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the technological developments most characteristic of late 20th century globalization include
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cheaper communications technologies
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by the 1980's economic policy tended to be dominated by
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monetarism
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the key transformation of the globalizing world economy by the last 20th century is
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the development of international production chains by multinational corporations
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