Which of the following is example of convergence theory in action?
Which of the following is an example of convergence theory in action? Germany rebuilt its economy after World War II, creating more job opportunities and prosperity for its citizens.
What refers to the process of integrating governments cultures and financial markets through international trade into a single world market?
Globalization refers to the process of integrating governments, cultures, and financial markets through international trade into a single world market.
What does the convergence theory of economic systems refer to?
Convergence theory explains that as a country's economy grows, its societal organization changes to become more like that of an industrialized society. Rather than staying in one job for a lifetime, people begin to move from job to job as conditions improve and opportunities arise.
Which of the following best defines the term globalization?
Globalization is the word used to describe the growing interdependence of the world's economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information.Oct 29, 2018
Which is an example of a commodity quizlet?
What are commodities and provide three examples? Commodities are products that are the same no matter who produces it, examples would be oil, paper, wheat or milk. Commodities are often the materials used to produce other products.
What is sociological globalization?
Globalization, according to sociologists, is an ongoing process that involves interconnected changes in the economic, cultural, social, and political spheres of society. As a process, it involves the ever-increasing integration of these aspects between nations, regions, communities, and even seemingly isolated places.Jul 2, 2019
What is convergence theory explain the significance convergence theory?
Convergence theory presumes that as nations move from the early stages of industrialization toward becoming fully industrialized, they begin to resemble other industrialized societies in terms of societal norms and technology. The characteristics of these nations effectively converge.Sep 30, 2019
What is convergence and divergence theory?
Divergence generally means two things are moving apart while convergence implies that two forces are moving together. In the world of economics, finance, and trading, divergence and convergence are terms used to describe the directional relationship of two trends, prices, or indicators.
What is convergent theory in sociology?
The convergence theory is the one which postulates that all the societies as they move from the early industrial development to complete industrialization tend to move towards a condition of similarity in terms of the general societal and technological norms.
What is the importance of studying globalization?
Why is globalization important? Globalization changes the way nations, businesses and people interact. Specifically, it changes the nature of economic activity among nations, expanding trade, opening global supply chains and providing access to natural resources and labor markets.
What is globalization international business?
Globalization is the increase in the flow of goods, services, capital, people, and ideas across international boundaries, according to the online course Global Business.Jun 22, 2021
What is economic globalization in your own words?
Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies.
Why does international trade occur?
International trade occurs because one country enjoys a comparative advantage in the production of a certain good or service, specifically if the opportunity cost of producing that good or service is lower for that country than any other country. If a country opts not to trade with other countries, it is considered to be an autarky.
What is an import?
An import refers to a good or service brought into the domestic country. An export refers to a good or service sold to a foreign country. International trade is a method of economic interaction between international entities and is an example of economic linkage. Other forms of economic linkages include (1) foreign financial investment, ...
What are the three arguments for a protectionist trade policy?
The three major arguments for a protectionist trade policy are: Generally, tariffs or import quotas lead to gains for producers and losses for consumers. Therefore, the imposition of tariffs or import quotas is generally created from the political influence of the producers.
Why are tariffs important?
Tariffs are a common element in international trading. The primary goals of imposing. is an excise that is paid on the sale of imported goods. Tariffs are put in place to discourage imports and protect domestic producers and are a source of government revenue.
What are non tariff barriers?
Non-Tariff Barriers. Non-Tariff Barriers Non-tariff barriers are trade barriers that restrict the import or export of goods through means other than tariffs. The World Trade. Excise Tax. Excise Tax Excise tax is a tax on the sale of an individual unit of a good or service.
What is import quota?
An import quota refers to a legal limit on the quantity of a good that can be imported within a country. Generally, import quotas are administered through licensing agreements. An import quota leads to a similar result as a tariff; however, instead of generating tax revenue, the fees are paid to the license holder as quota rent.
What is the difference between an export and an import?
The exchanges can be imports or exports. . An import refers to a good or service brought into the domestic country . An export refers to a good or service sold to a foreign country. International trade is a method of economic interaction between international entities and is an example of economic linkage.
What is the analysis and resultant positions taken by traders and investors based on the information they receive about government policy and
The analysis and resultant positions taken by traders and investors based on the information they receive about government policy and international transactions create speculation as to where prices will move. When enough people agree on one direction, the market enters into a trend that could sustain itself for many years.
What is the role of currency markets?
International transactions, balance of payments between countries and economic strength are harder to gauge on a daily basis, but they also play a major role in longer-term trends in many markets. The currency markets are a gauge of how well one country's currency and economy is doing relative to others. A high demand for a currency means that currency will rise relative to other currencies.
Why do prices fluctuate?
If supply is relatively stable, prices can fluctuate higher and lower as demand increases or decreases. These factors can cause both short- and long-term fluctuations in the market, but it is also important to understand how all these elements come together to create trends.
What is Cory's trading strategy?
Cory is an expert on stock, forex and futures price action trading strategies. Trends are what allow traders and investors to capture profits. Whether on a short- or long-term time frame, in an overall trending market or a range of environment, the flow from one price to another is what creates profits and losses.
What happens if a country's currency is weak?
If a country's currency is weak, this will deter investment into that country, as potential profits will be eroded by the weak currency .
What is trending in trading?
Trends are what allow traders and investors to capture profits. Whether on a short- or long-term time frame, in an overall trending market or a range of environment, the flow from one price to another is what creates profits and losses. There are four major factors that cause both long-term trends and short-term fluctuations. ...
Why does oil price rise?
As supply dwindles or demand increases, a long-term rise in oil prices can occur as market participants outbid one another to attain a seemingly finite supply of the commodity. Suppliers want a higher price for what they have and higher demand pushes the price that buyers are willing to pay.
What does BOP mean?
Theoretically, the BOP should be zero, meaning that assets (credits) and liabilities (debits) should balance, but in practice, this is rarely the case. Thus, the BOP can tell the observer if a country has a deficit or a surplus and from which part of the economy the discrepancies are stemming .
What is the current account?
The current account is used to mark the inflow and outflow of goods and services into a country. The capital account is where all international capital transfers are recorded. In the financial account, international monetary flows related to investment in business, real estate, bonds, and stocks are documented.
Why is BOP zero?
All trades conducted by both the private and public sectors are accounted for in the BOP to determine how much money is going in and out of a country. If a country has received money, this is known as a credit, and if a country has paid or given money, the transaction is counted as a debit . Theoretically, the BOP should be zero, meaning ...
What led to BOP liberalization?
Globalization in the late 20th-century led to BOP liberalization in many emerging market economies. These countries lifted restrictions on BOP accounts to take advantage of the cash flows arriving from foreign, developed nations, which in turn boosted their economies. Take the Next Step to Invest.
What happens when a country has a current account deficit?
When a country has a current account deficit that is financed by the capital account, the country is actually foregoing capital assets for more goods and services. If a country is borrowing money to fund its current account deficit, this would appear as an inflow of foreign capital in the BOP.
What are government owned assets?
Also included are government-owned assets, such as foreign reserves, gold, special drawing rights (SDRs) held with the International Monetary Fund (IMF), private assets held abroad, and direct foreign investment. Assets owned by foreigners, private and official, are also recorded in the financial account.
What is the BOP?
The Bottom Line. The balance of payments ( BOP) is the method by which countries measure all of the international monetary transactions within a certain period. The BOP consists of three main accounts: the current account, the capital account, and the financial account. The current account is meant to balance against the sum ...
Why Does International Trade occur?
- International trade occurs because one country enjoys a comparative advantage in the production of a certain good or service, specifically if the opportunity cost of producing that good or service is lower for that country than any other country. If a country opts not to trade with other countries, it is considered to be an autarkyAutarkyAutarky is...
Sources of Comparative Advantage
- 1. International differences in climate
International differences in climate play a significant role in international trade – for example, tropical countries export products like coffee and sugar. In contrast, countries in more temperate areas export wheat or corn. Trade is also driven by differences in seasons and geography. - 2. Differences in factor endowments
Differences in factor endowments imply that some countries are more resource-rich than others in land, labor, capital, and human capital. According to the Heckscher-Ohlin model, a country enjoys a comparative advantage in production if the resources are abundantly available within th…
Examples of International Trade Policies
- Most economists favor free trade agreements because of the potential for gains from trade and comparative advantage. This is because these economists believe that government intervention will reduce the efficiency of the markets. Yet, many governments introduce protectionist policies to protect domestic producers from foreign producers. There are two major protectionist policies:
Arguments For A Protectionist Trade Policy
- The three major arguments for a protectionist trade policy are: 1. National security 2. Job creation 3. Protection of infant industries Generally, tariffs or import quotas lead to gains for producers and losses for consumers. Therefore, the imposition of tariffs or import quotas is generally created from the political influence of the producers.
Additional Resources
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Major Market Forces
Learning how these major factors shape trends over the long term can provide insight into how future trends may occur. Here are the four major factors:
A Mix of Factors
- These factors can cause both short- and long-term fluctuations in the market, but it is also important to understand how all these elements come together to create trends. While all of these major factors are categorically different, they are closely linked to one another. Government mandates can affect international transactions, which play a role in speculation, and changes in …
The Participant Effect
- The analysis and resultant positions taken by traders and investors based on the information they receive about government policy and international transactions create speculation as to where prices will move. When enough people agree on one direction, the market enters into a trend that could sustain itself for many years. Trends are also perpetuated by market participants who wer…
The Bottom Line
- As stated above, trends are generally created by four major factors: government, international transactions, speculation/expectation, and supply and demand. These areas are all linked as expected future conditions shape current decisions and those current decisions shape current trends. Government effects trends mainly through monetary and fiscal p...
The Balance of Payments Divided
The BOP is divided into three main categories: the current account, the capital account, and the financial account. Within these three categories are sub-divisions, each of which accounts for a different type of international monetary transaction.
The Balancing Act
- The current account should be balanced against the combined capital and financial accounts; however, as mentioned above, this rarely happens. We should also note that, with fluctuating exchange rates, the change in the value of money can add to BOP discrepancies. If a country has a fixed asset abroad, this borrowed amount is marked as a capital account outflow. However, th…
Liberalizing The Accounts
- The rise of global financial transactions and trade in the late-20th century spurred BOP and macroeconomic liberalization in many developing nations. With the advent of the emerging marketeconomic boom, developing countries were urged to lift restrictions on capital- and financial-account transactions to take advantage of these capital inflows. Many of these countri…
The Bottom Line
- The balance of payments (BOP) is the method by which countries measure all of the international monetary transactions within a certain period. The BOP consists of three main accounts: the current account, the capital account, and the financial account. The current account is meant to balance against the sum of the financial and capital account but ...
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