Exploring the Economic Benefits of Foreign Aid for Economically Developed Countr...
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Questions and Answers

Which of the following is true about foreign aid from the US?

  • Most of the aid is public
  • The Red Cross provides the majority of aid
  • Foreign aid promotes protectionism
  • The World Bank provides aid by lending money (correct)

    • What is the main benefit for EDCs in the arrangement where the World Bank provides aid to LDCs?

  • Access to natural resources
  • Increased economic growth (correct)
  • Protection of domestic wages
  • Diversified economy

    • What is the main reason for the rapid growth of Newly Industrialized Countries (NICs)?

  • Investments in human and physical capital (correct)
  • Technical assistance
  • Availability of natural resources
  • Free trade policies

    • What has been happening to China's GDP over time?

    <p>It has been increasing</p> Signup and view all the answers

    What has been happening to the rate of growth of the Chinese economy recently?

    <p>It has been decreasing</p> Signup and view all the answers

    What are the two most common forms of limiting trade?

    <p>Tariff and quota</p> Signup and view all the answers

    Which organization replaced GATT in 1995?

    <p>WTO</p> Signup and view all the answers

    What is the main purpose of GATT?

    <p>To reduce tariffs and other trade barriers</p> Signup and view all the answers

    What is the main purpose of the IMF?

    <p>To regulate international money supplies</p> Signup and view all the answers

    Which trade agreement started as an alliance of coal and steel interests in 1950?

    <p>EU</p> Signup and view all the answers

    What is the main purpose of NAFTA?

    <p>To reduce tariffs and other trade barriers</p> Signup and view all the answers

    What is the role of the WTO?

    <p>To negotiate free trade deals</p> Signup and view all the answers

    Which one of these is a characteristic of Economically Developed Countries (EDCs)?

    <p>Technologically advanced economy</p> Signup and view all the answers

    Which one of these is a characteristic of Newly Industrialized Countries (NICs)?

    <p>Rapid growth in GDP and GDP per capita</p> Signup and view all the answers

    Which one of these is a reason for lower life expectancy in LDCs?

    <p>Access to food and healthcare</p> Signup and view all the answers

    Which one of these is a characteristic of Least Developed Countries (LDCs)?

    <p>Low GDP and GDP per capita</p> Signup and view all the answers

    What is one of the major barriers to development in LDCs?

    <p>Limited natural resources</p> Signup and view all the answers

    What type of economy do LDCs have?

    <p>Traditional economy</p> Signup and view all the answers

    Which of the following accurately defines the balance of trade?

    <p>Exports minus imports</p> Signup and view all the answers

    What does the balance of payments measure?

    <p>Goods, services, money spent, travel, and investments</p> Signup and view all the answers

    What determines the exchange rates?

    <p>Supply and demand of money</p> Signup and view all the answers

    Where are exchange rates published daily?

    <p>Wall Street Journal</p> Signup and view all the answers

    What does the equation $0.7437 \times 300$ represent?

    <p>Exchange rate of Canadian dollars to US dollars</p> Signup and view all the answers

    What does the equation $\text{{Exchange rate}} \times \text{{Cost in Canada}}$ calculate?

    <p>Cost of a coat in the US</p> Signup and view all the answers

    Which of the following best describes globalization in economic terms?

    <p>The interdependence of nations around the globe fostered through free trade.</p> Signup and view all the answers

    What is the definition of supply chain?

    <p>The network between a company and its suppliers to produce and distribute a specific product to the final buyer.</p> Signup and view all the answers

    What is the practice of basing some of a company's processes or services overseas, so as to take advantage of lower costs called?

    <p>Offshoring</p> Signup and view all the answers

    What is the practice of obtaining goods or services from an outside or foreign supplier, especially in place of an internal source called?

    <p>Outsourcing</p> Signup and view all the answers

    Which of the following is an example of offshoring?

    <p>All of the above.</p> Signup and view all the answers

    Which of the following is an example of outsourcing?

    <p>IBM hires an Indian company to develop software.</p> Signup and view all the answers

    Study Notes

    Foreign Aid and Global Economic Relationships

    • US foreign aid aims to support economic development, humanitarian needs, and geopolitical goals.
    • The World Bank provides aid to LDCs (Least Developed Countries) primarily to promote sustainable development and poverty alleviation.
    • Rapid industrialization in Newly Industrialized Countries (NICs) is often driven by increased foreign investment, technological advances, and export-oriented economies.
    • China's GDP has been consistently growing over the past few decades, establishing it as one of the world's largest economies.
    • Recently, the growth rate of the Chinese economy has shown signs of slowing down due to various factors, including trade tensions and domestic challenges.

    Trade Regulations and Agreements

    • The two most common forms of limiting trade are tariffs (taxes on imports) and quotas (limits on the quantity of imports).
    • The General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO) in 1995 to provide a more robust framework for international trade.
    • GATT's main purpose was to promote free trade by reducing tariffs and other barriers.
    • The International Monetary Fund (IMF) primarily aims to ensure the stability of the international monetary system by providing financial assistance and advice to member countries.

    Historical Trade Alliances

    • The European Coal and Steel Community (ECSC), which started in 1950, was the precursor to today's European Union.
    • NAFTA (North American Free Trade Agreement) aims to promote free trade and economic cooperation between the United States, Canada, and Mexico.

    Organizations and Their Functions

    • The WTO oversees global trade agreements, resolves trade disputes, and promotes free trade among nations.
    • Economically Developed Countries (EDCs) are characterized by high levels of industrialization, advanced technological infrastructure, and high living standards.
    • Newly Industrialized Countries (NICs) are marked by rapid economic growth and emerging industrial sectors.

    Development Challenges and Economic Structures

    • Lower life expectancy in LDCs can be attributed to poor healthcare, malnutrition, and lack of access to clean water.
    • LDC characteristics include low income levels, weak institutions, and high vulnerability to economic shocks.
    • A major barrier to development in LDCs is the lack of infrastructure and access to education.

    Economic Indicators and Exchange Rates

    • LDCs typically operate with a predominantly agrarian economy, heavily reliant on agriculture and informal sectors.
    • The balance of trade measures the difference between the value of exports and imports.
    • The balance of payments tracks a country's financial transactions with the rest of the world, including trade, investments, and foreign aid.
    • Exchange rates are determined by market forces, including supply and demand, interest rates, and inflation.
    • Daily exchange rates are published by financial institutions and market platforms.
    • The equation $0.7437 \times 300$ represents a currency conversion calculation, determining the equivalent value in another currency.
    • The expression $\text{{Exchange rate}} \times \text{{Cost in Canada}}$ calculates the cost of a good or service in a foreign currency.

    Globalization and Economic Practices

    • Globalization in economic terms refers to the increasing interconnectedness of national economies, driven by trade, investment, and technology.
    • A supply chain represents the entire system of production, processing, and distribution of goods from origin to consumer.
    • Offshoring involves relocating some company processes to foreign countries to benefit from lower labor or production costs.
    • Outsourcing refers to hiring external firms to perform specific services or processes instead of relying on internal resources.

    Practical Examples

    • An example of offshoring is a US-based company opening a manufacturing facility in Asia.
    • An example of outsourcing is a company contracting a foreign call center to handle customer service operations.

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    Related Documents

    International Economics PDF

    Description

    Discover how foreign aid can promote development and benefit economically developed countries (EDCs). Explore the sources of aid, such as private organizations like the Red Cross and the Rockefeller Foundation, as well as international economic organizations like the World Bank. Learn about the arrangement in which the World Bank borrows money from EDCs and lends it to less economically developed countries (LDCs), and uncover the advantages that EDCs can gain from this arrangement.

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