Political Responses to Global Market Forces - AP Comparative Government and Politics

1. What is a tariff?

   A tariff is a tax imposed on imported goods. Makes foreign goods more expensive to protect domestic producers.

2. What does the term 'neoliberalism' refer to in economic policy?

   Neoliberalism refers to free-market policies and deregulation. Emphasizes privatization, deregulation, and reduced government intervention.

3. Which term describes policies supporting local over global economies?

   Localization supports local economies. Prioritizes regional production and consumption over global trade.

4. Identify a political strategy to manage the effects of globalization.

   Implementing social safety nets is a strategy. Programs like unemployment benefits cushion globalization's negative effects.

5. Identify a criticism of globalization.

   Globalization can lead to cultural homogenization. Global integration can erode distinct local cultural identities.

6. What is economic nationalism?

   Economic nationalism prioritizes domestic control over the economy. Emphasizes protecting national economic interests over global integration.

7. Which policy tool is used to counteract currency appreciation?

   Monetary policy interventions can counteract currency appreciation. Central banks adjust interest rates to influence currency values.

8. Which economic theory supports the idea of comparative advantage?

   Classical trade theory supports comparative advantage. Countries should specialize in goods they produce most efficiently.

9. What does 'tariff escalation' mean?

   Tariff escalation refers to higher tariffs on processed goods than raw materials. Encourages countries to export raw materials rather than finished products.

10. Which term refers to government intervention to influence currency value?

    Currency manipulation refers to such intervention. Governments adjust exchange rates to gain trade advantages.

11. Which international organization promotes global trade liberalization?

    The World Trade Organization (WTO) promotes trade liberalization. Sets global trade rules and resolves trade disputes between nations.

12. What does the term 'liberalization' refer to in economic policy?

    Liberalization refers to reducing government restrictions in the economy. Promotes free market principles by reducing state intervention.

13. What does FDI stand for in economic terms?

    FDI stands for Foreign Direct Investment. Investment where foreign entities acquire control in domestic businesses.

14. What is the impact of a trade deficit on an economy?

    A trade deficit can lead to increased foreign debt. Importing more than exporting requires borrowing to finance gap.

15. Identify an economic benefit of free trade agreements.

    They can lead to lower consumer prices. Reduced tariffs and barriers lower costs for consumers.

16. What is the primary goal of trade agreements?

    To facilitate and increase trade between member countries. Reduces barriers to create larger, more integrated markets.

17. Identify a key political response to global market forces.

    Trade protectionism is a key response. Governments use this to shield domestic industries from foreign competition.

18. What does the term 'economic sovereignty' refer to?

    Economic sovereignty means control over one's own economic policy. Nation's ability to make independent decisions about its economy.

19. Which organization is known for providing loans to developing countries?

    The World Bank provides loans to developing countries. Finances development projects and poverty reduction programs globally.

20. Identify a consequence of increased FDI.

    Economic growth and job creation in the host country. Foreign investment brings capital and creates employment opportunities.

21. What is the purpose of anti-dumping measures?

    To prevent foreign producers from selling goods below cost to harm domestic industries. Protects against unfair pricing that undercuts domestic competition.

22. What is the role of the International Monetary Fund (IMF)?

    The IMF promotes global financial stability. Provides loans and monitors global monetary system stability.

23. What is trade protectionism?

    Trade protectionism involves tariffs and quotas to protect domestic industries. Uses barriers like tariffs and quotas to shield domestic producers.

24. Which policy seeks to protect domestic industries from foreign competition?

    Protectionist policies seek to protect domestic industries. Shields local businesses from international competitive pressures.

25. Identify a key driver of globalization.

    Technological advancement is a key driver of globalization. Innovation in communication and transportation enables global integration.

26. Which policy involves reducing trade barriers to encourage free trade?

    Trade liberalization involves reducing trade barriers. Removes barriers to promote free market access and competition.

27. Identify a benefit of economic globalization.

    It can lead to greater economic efficiency and innovation. Competition and specialization drive productivity and technological progress.

28. Which term describes relocation of production to low-cost countries?

    Offshoring describes relocation to low-cost countries. Companies move operations abroad to reduce labor and production costs.

29. What is a subsidy?

    A subsidy is a government payment to support a domestic industry. Financial assistance helps domestic firms compete against foreign rivals.

30. What is the primary focus of fiscal policy?

    Fiscal policy focuses on government spending and taxation. Government uses budget tools to influence economic activity.

31. Identify a political challenge posed by economic inequality.

    Economic inequality can lead to social unrest and political instability. Wealth disparities can trigger protests and undermine government legitimacy.

32. What is the significance of the G20 in global economic governance?

    The G20 promotes international financial stability and cooperation. Forum for major economies to coordinate financial policies.

33. Identify one potential effect of trade liberalization.

    Increased competition in domestic markets. Foreign firms can compete directly with domestic companies.

34. What is a quota in trade policy?

    A quota is a limit on the quantity of a good that can be imported. Restricts import volume to protect domestic market share.

35. Which strategy involves government reducing its role in the economy?

    Economic liberalization involves reducing government role. Privatization and deregulation increase market-based decision making.

36. Identify a political risk of globalization.

    Loss of national sovereignty. International integration can undermine domestic political autonomy.

37. Identify one impact of currency manipulation.

    It can make exports cheaper and imports more expensive. Weaker currency boosts export competitiveness while raising import costs.

38. Identify a reason governments might implement tariffs.

    To protect domestic industries from cheap imports. Tariffs make foreign goods more expensive than domestic alternatives.

39. What is globalization in the context of political economy?

    Globalization refers to the integration of economies, cultures, and politics across borders. Encompasses economic, cultural, and political interconnectedness worldwide.

40. What is economic inequality?

    Economic inequality is the unequal distribution of wealth and income. Gap between rich and poor in wealth and income distribution.

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