international monetary system
-a global network of institutions to promote international trade and the regulation of currency among Western countries
Bretton Woods Agreement
- signed in 1944 by 44 countries in Bretton Woods, New Hampshire
- to establish a system of rules, institutions, and procedures for the postwar global economy
gold standard
- from Bretton Woods Agreement
- all printed money must be convertible to hold and could be cashed in at any time for gold
fixed exchange rate
-the value of a country’s currency as set by it’s government
floating exchange rate
-currency rates that are not fixed by the government, but instead find their own value on the foreign exchange market
World Bank
- from Bretton Woods Agreement
- agency of UN
- in practice is independent, controlled by 184 member countries
- provide long-term loans to less developed countries in financial difficulty
International Monetary Fund (IMF)
- from Bretton Woods Agreement
- international agency that works with the World Bank
- brings stability to international monetary affairs and helps expand world trade
- provides short-term loans
centrally planned economy
- system in which government planners decide what and how many goods to produce
- government runs economy
free market economy
-system in which government does not intervene in the production and control of goods and services
recession
-period of reduced economic activity lasting longer than 6 months
John Maynard Keynes
- British
- believed direct government intervention would stabilize boom and busy cycle in economy
- believed in mixed market economy
Friedrich Hayek
- believed less government involvement would lead to greater economic freedom and prosperity
- believed in free market economy
- greatly influenced ideas of British Prime Minister Margaret Thatcher
Milton Friedman
- believed less government control and freer markets would lead to greater prosperity and social and political freedom
- people had to learn to adapt to changes in the market and in the demand for goods and services, rather than depending on government for financial assistance
General Agreement on Tariffs and Trade (GATT)
- from Bretton Woods Agreement
- an international agreement between 1947 and 1995 that aimed to reduce trade barriers among member countries
tariff
- a tax placed on imported goods
- to increase price and reduce competition with domestic products
World Trade Organization (WTO)
- international organization founded in 1995, resulting from GATT
- works to improve trade relations among members, by removing barriers to trade
Free Trade Agreement (FTA)
- 1989
- treaty between Canada and the United States to promote trade by reducing trade barriers between the two
North American Free Trade Agreement (NAFTA)
- 1994
- treaty among Canada, the United States, and Mexico to improve trade by removing trade barriers
gross domestic product (GDP)
-the total value of goods and services produced by a country in a calendar year
gross domestic product (GDP) per capita
-value in US dollars of all goods and services a country produces in a year, divided by the country’s average population for the same year
Group of Eight (G8)
- informal group
- eight major industrial democracies
- meets at annual summits to discuss economic and foreign policies
- Canada, France, Germany, Italy, Japan, Russia, United Kingdom, United States
Canadian International Development Agency (CIDA)
-government agency responsible for administering foreign aid programs in less developed countries
subsidiaries
-companies controlled by a parent company
human-capital
-knowledge, skills and talents that workers have
