INR exam 3 - INR EXAM 3 1. 2. 3. 4. 5. 6. 7. How is the...

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INR EXAM 3 1. How is the theory of comparative advantage significant in our understanding of the politics international trade? The theory has crucial implications for our understanding of international trade. Comparative advantage shows why trade is beneficial to both partners. By specializing and trading, states and individuals can increase overall consumption and efficiency. 2. Explain fiscal and monetary policy. The 2 major ways in which governments can influence their economies. Fiscal refers to government budgets – whether they are in surplus or deficit. When economic growth is slow, running a budget deficit (spending more money) can stimulate economic growth. Monetary policy refers to the government’s ability to influence the economy through its control over interest rate. 3. How are fiscal and monetary policies limited in a globalized economy? As economies become more closely linked, one government’s economic policies have increasingly significant effects in other countries, which may cause a response from adversely affected countries. 4. What are the major forces driving economic globalization? Globalization is the process in which international trade increases relative to domestic trade. A major driving force is the growing importance on international trade to local and domestic economies. Another is the cost of moving almost anything around the world and the time it takes are decreasing. Decreased transportation costs mean that price differentials in distant places can be exploited much more easily. 5. How does constructivist theory account for the emergence of the Bretton Woods system? The Bretton Woods system consisted of both trade and financial
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INR exam 3 - INR EXAM 3 1. 2. 3. 4. 5. 6. 7. How is the...

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