Exam#2 Study Guide

Exam#2 Study Guide - Liberal Economic Theory- Economic...

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Liberal Economic Theory- Economic relations are organized by market and price mechanisms Adam Smith [Wealth of Nations] -Maximize economic efficiency -Create economic growth (though distribution may be unequal) -Promotes individual welfare Markets Actors in markets --Actors in Markets make rational choices based on self interest --They use cost/benefit analysis to make these decisions Policies: Free Trade --Lower tariffs/non-tariff barriers [trade embargo] --Minimize government interference in the market Nationalist Economic Theory- Assumptions : National Wealth=National Power -A nations economy is subordinate [secondary to] to national interests Goals : To create a positive balance of trade (reduce imports/increase exports) –Create and protect domestic industry --Limit others competitive advantage Policies : (Protectionalism) – Marxist Economic Theory- Materialism: Economic relations (production and distribution of wealth) are the foundation of all societies Capitalism: is inherently unequal -- Two opposing classes: capitalists (owners of the means of production) and workers -- Surplus capital (profit) is made at the expense of the workers labor and is controlled by capitalists [Exploitation] -- Workers will eventually revolt an overthrow this unequal system in order to Redistribute Wealth Equitably Alternative to revolution=Social Democracy: --Mitigates the inequality with modern economic relations -- Creates social safety net. .Cradle to grave welfare Structural Adjustment Programmes (SAPs)- Policy changes implemented by the International Monetary Fund (IMF) and the World Bank (the Bretton Woods Institutions) in developing countries. These policy changes are conditions (Conditionality’s) for getting new loans from the IMF or World Bank, or for obtaining lower interest rates on existing loans. Conditionality’s are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan. Structural Adjustment Programs generally implement "free market" programs and policy. These programs include internal changes (notably privatization and deregulation) as well as external ones, especially the reduction of trade barriers. Poverty Reduction Strategy Papers (PRSPs)- Doc uments required by the IMF and World Bank before a country can be considered for debt relief within the HIPC program. They are prepared by the member countries through a participatory process involving domestic stakeholders as well as external development partners, including the World Bank and International Monetary Fund. Sustainable Development: 3 components-
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This document was uploaded on 10/26/2011 for the course ITS 201 at Miami University.

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Exam#2 Study Guide - Liberal Economic Theory- Economic...

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