International Trade and Money Chapter :5 Questions and Answers

Economic Liberalism - -approach that generally shares the assumption of anarchy but does not see this condition as precluding extensive. Cooperation to realize common gains from economic exchanges. Emphasizes absolute over relative gains and in practice, a commitment to free trade, free capital flows and an open world economy -Free Trade - -the flow of goods & services across national boundaries unimpeded by tariffs or other restrictions; in principle, free trade was a key aspect of Britain's policy after 1846 and of US policy after 1845 -Gold Standard - -A system in international monetary relations, prominent for a century before in the 1970s, in which the value of national currencies was pegged to the value of gold or other precious metals -Fixed Exchange Rates - -the official rates of exchange for currencies set by governments: not a dominant mechanism in the international monetary system since 1973 -Discount Rate - -interest rate charged by governments when they lend money to private banks. the discount rate is set by countries' central banks -General Agreement on Tariffs & Trade - -A world organization established in 1947 to work for freer trade on a multilateral basis: the GATT was more of a negotiating framework than an administrative institution. Became the World Trade Organization