Globalization & Sustainable Prosperity: Unit 3

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Questions and Answers

What is the primary goal of trade liberalization?

To increase tariffs on imports

To limit access to foreign markets

To reduce barriers to international trade (correct)

To create more trade barriers

Which statement accurately describes the General Agreement on Tariffs and Trade (GATT)?

It was established to increase trade barriers.

Its goal is to treat goods from one’s own country preferentially.

It ensures that domestic industries are not protected.

It promotes equality among all trading nations. (correct)

What was a significant outcome of the North American Free Trade Agreement (NAFTA)?

It added Mexico to the trading bloc of the US and Canada. (correct)

It was exclusively beneficial for Canadian producers.

It decreased trade across North America.

It removed trade relations between the US and Canada.

What does free trade primarily entail?

Very few restrictions on international trade Signup and view all the answers

The World Trade Organization (WTO) aims to improve international trade relations by encouraging what action?

Removal of tariffs and trade barriers Signup and view all the answers

Which of the following best describes a trading bloc?

A collective of nations working for better trading terms Signup and view all the answers

The United States Mexico Canada Agreement (USMCA) changed production requirements by increasing what percentage of North American vehicle production?

60% to 75% Signup and view all the answers

What was one of the main purposes of the Free Trade Agreement (FTA) between the US and Canada?

To open borders for Canadian goods within the US market Signup and view all the answers

What key feature of the Gold Standard required a country to hold a specific asset?

Currency value backed by gold reserves Signup and view all the answers

What is a consequence of printing more money when the economy is in debt?

Inflation due to decreased value Signup and view all the answers

How did the U.S. lifting the Gold Standard affect global currency systems?

Many countries followed the U.S. and adopted floating exchange rates Signup and view all the answers

What is the primary function of the World Bank?

To provide funds to countries following specific criteria Signup and view all the answers

What is a significant characteristic of the International Monetary Fund's (IMF) operations?

It provides short-term solutions and monitors exchange rates Signup and view all the answers

Which of the following is true about how contributions to the IMF are determined?

Quotas based on each country's economy Signup and view all the answers

What was one of the main problems associated with the criteria set by the World Bank?

Restrictions leading to reduced funds for some countries Signup and view all the answers

What aspect of currency valuation is primarily influenced by a country's economic power?

The value of money on the international market Signup and view all the answers

What was the primary purpose of the Bretton Woods Agreement signed in 1944?

To set up a system of rules for the global economy. Signup and view all the answers

Which institutions were established as a result of the Bretton Woods Conference?

World Bank and International Monetary Fund. Signup and view all the answers

What was a significant outcome of the Bretton Woods Conference regarding international trade?

Establishment of regulations to facilitate international trade. Signup and view all the answers

In what way did the International Monetary Fund (IMF) influence global finance after its formation?

By offering financial assistance and stabilizing economies. Signup and view all the answers

Which statement best describes the function of the World Bank?

To provide funding for development projects in low-income countries. Signup and view all the answers

What economic ideology did the Bretton Woods Conference initially promote?

Free-market principles and open trade. Signup and view all the answers

Which economic system was widely discussed during the Bretton Woods Conference in relation to rebuilding economies?

Free market system. Signup and view all the answers

What primary need led to the establishment of the Bretton Woods Conference?

The need to rebuild economies after World War II. Signup and view all the answers

Study Notes

Unit 3: Globalization & Sustainable Prosperity

The unit explores the extent to which globalization contributes to sustainable prosperity for everyone.
Economic globalization is a key focus.

Economic Globalization

Economic ideas have significantly influenced contemporary economic globalization.
Key economic ideas include, how money works, establishing a money system through the World Bank and International Monetary Fund, and the expansion of free markets to previously communist countries.

Focus on Monetary Systems

The establishment of a global money system is a central part of globalization.
Focuses on how World Bank and International Monetary Fund operate.
Focus on the expansion of free markets to communist countries in Europe.

Auto Pact

This section likely discusses a specific agreement or pact focusing on the car sector, likely the Canada-United States Auto Pact.

Bretton Woods Conference

The Bretton Woods Conference was a crucial meeting after World War II.
This meeting was to rebuild war-torn economies.
The Bretton Woods Agreement created rules and international organizations for the global economy.
The conference involved 44 participating countries.
Financial institutions like the World Bank and the International Monetary Fund (IMF) were established as part of the Bretton Woods Agreement, aiming to promote international trade.

Countries Attended the Bretton Woods Conference

Key countries involved were the USA, Canada, Western Europe, Japan, and Australia.

New International Monetary System

A need arose to rebuild Europe following World War II.
Allies established a new standard to rebuild the global economy.
The Bretton Woods Agreement established the rules and regulations for this new post-war economic system.

The Gold Standard

All money printed had to be backed by a country's gold reserves.
A fixed-exchange rate was necessary for the value of money.
Issues of inflation and the need to borrow money or print more were discussed as potential difficulties with the gold standard.

The Problem Made Worse: Inflation

The need to borrow or print money sometimes leads to increased debt.
Increased debt leads to the possibility of inflation; where money loses value.

Floating Exchange

The US shifted away from the gold standard due to debt.
This change impacted other countries, leading to floating exchange rates.
These rates are driven by supply and demand which influence the currency value.

Value of Money

Money's value reflects a country's economic strength and power.
Often countries base their own currencies on the US dollar.

The World Bank

Established as part of the UN.
Works independently of other UN members.
Provides financial aid to specific countries based on political and economic criteria.

International Monetary Fund (IMF)

Works with the World Bank, offering short-term solutions for countries.
Monitors exchange rates globally.
Provides loans to countries based on economic strength.
Countries contribute to the IMF based on their economic size.

Free Market Expansion

Economic shift after the fall of the Iron Curtain emphasized free-market economies.
Centralized planned economies (government controlled) are opposite to free markets.
Major countries like India and China also adopted a more free-market approach.

Economic Globalization: Free Trade (3.5)

Globalization emphasized the removal of trade barriers, meaning tariffs.

Trade Liberalization

Removing obstacles to international trade, particularly tariffs, was a major component of globalization.

Tariffs

A tariff is a tax placed on imported or exported goods.

Free Trade

Free trade resulted from trade liberalization.
It meant that few restrictions were placed on global trade.

Trading Blocs

Trading blocs are groups of nations interacting to offer each other better trading terms.

General Agreement on Tariffs and Trade (GATT)

Created as a UN agency (1947)
Intended for all countries to be equal in trade
Goods from one country should be treated similar to goods from another country

Free Trade Agreement (FTA)

The US and Canada opened borders.
Canada sought access to the US market and the US wanted more access to Canada's resources.

North American Free Trade Agreement (NAFTA)

Added Mexico to the trade agreement.
Increased trade between Canada, the US and Mexico.

United States-Mexico-Canada Agreement (USMCA)

Replaced NAFTA in 2020.
Made some changes to the arrangement.
Including North American vehicle production increased.

World Trade Organization (WTO)

Improves global trade relations by encouraging countries to remove trade barriers.
Follows specific rules for member countries to be included, but exclusion can impede trade success.

The Group of Seven (G7)

Made up of the world's strongest economies.
Discusses economics & foreign policy.
Uses influence through representation in world organizations.

Economic Globalization: International Organizations

This is a section on various international organizations involved in global trade.
The slide provides an overview of organizations and their role.

Summary (End of Day Check-in)

Sections on the unit summarize or recap.
Different types of check-in questions, that require summary of unit content.

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Description

This quiz delves into the impact of globalization on sustainable prosperity, with a focus on economic globalization and monetary systems. Explore key concepts such as the World Bank, International Monetary Fund, and the expansion of free markets. Additionally, understand the significance of historical agreements like the Auto Pact and the Bretton Woods Conference.