Adopting the U.S. currency in place of a nation's own money, a step discussed for Venezuela, is called dollarization.
Missing Word
dollarization
Dollarization means a country uses the U.S. dollar for most transactions instead of its own currency, which can stop a government from paying its bills by printing money.
Category: Inflation Worldwide
Question 2
Zimbabwe's annual price increases of hundreds of millions of percent in 2008 are an example of hyperinflation.
Missing Word
hyperinflation
Hyperinflation is extremely rapid and accelerating growth in the price level, typically driven by a government printing money to cover huge budget deficits.
Category: Inflation Worldwide
Question 3
Trading goods and services directly for other goods and services without using money is called barter.
Missing Word
barter
Barter is direct exchange of goods and services, which is common among workers in low-income economies who are outside regular wage jobs.
Category: Unemployment Worldwide
Question 4
A country with no coastline, which can limit its access to sea trade, is described as landlocked.
Missing Word
landlocked
Landlocked countries are surrounded by other countries, and this geographic feature can raise the cost of trade and help explain differences in income.
Category: Comparing Economies
Question 5
Investors in high-income countries can spread their funds across many national economies, so a downturn at home hurts them less, a strategy called diversification.
Missing Word
diversification
Diversification means spreading investments across different assets or economies so that a loss in one is cushioned by results in others. It is one reason financial capital flows from high-income countries into lower-income ones.
Category: Trade and Capital Flows
Question 6
Supporters of foreign aid argue it can help low-income countries build basic physical systems such as clean water, plumbing, electricity, and roads, known as infrastructure.
Missing Word
infrastructure
Infrastructure is the basic physical capital that an economy relies on, such as water, power, and transportation systems. Building it is one of the main goals aid supporters name, because firms and workers are more productive when it exists.
Category: Growth Policy
Question 7
When market forces lower a currency's value compared with other currencies, the change is called depreciation.
Missing Word
depreciation
Depreciation is a fall in a currency's market exchange value, which makes a country's exports cheaper abroad and its imports more expensive at home.
Category: Trade and Capital Flows
Question 8
A country whose imports of goods and services are greater than its exports runs a trade deficit.
Missing Word
deficit
A trade deficit occurs when imports exceed exports, and the country must finance the gap with loans or investment from abroad.
Category: Trade and Capital Flows
Question 9
Spending cuts and tax increases that Greece adopted after foreign lenders stopped lending, which sparked widespread protests, are known as austerity.
Missing Word
austerity
Austerity is a set of policies that reduce government spending and raise taxes to shrink budget deficits, often after a country loses access to borrowing.
Category: Trade and Capital Flows
Question 10
Most growth economists see rising living standards as resting on gains in productivity, the output produced per worker or per hour worked.
Missing Word
productivity
Productivity is output per unit of labor, and it grows with more human capital, more physical capital and better technology.
Category: Growth Policy
Question 11
When officials use public office for private gain, as economist Dambisa Moyo argues often happens to foreign aid money, the problem is called corruption.
Missing Word
corruption
Corruption is the misuse of public office for personal benefit, and it is one of the obstacles that keeps many low-income countries from growing.
Category: Growth Policy
Question 12
GDP per capita is calculated by dividing a country's GDP by its population.
Missing Word
population
Dividing total output by the number of people gives output per person, the most common rough measure of average living standards.
Category: Comparing Economies
Question 13
Traders who sell a currency because they expect its value to fall further, adding to the decline, are called speculators.
Missing Word
speculators
Speculators buy or sell assets to profit from expected price changes, and their selling can turn a gradual fall in a currency into a rapid one.
Category: Trade and Capital Flows
Question 14
Spain cannot run its own monetary policy or lower the value of a national currency because it uses the euro.
Missing Word
euro
The euro is the shared currency of many European Union members, and the European Central Bank, not Spain, sets its monetary policy.
Category: Unemployment Worldwide
Question 15
Workers who are not connected to a labor market gain little from specialization, in which each person concentrates on a narrow set of tasks and trades for the rest.
Missing Word
specialization
Specialization, also called the division of labor, raises output because workers become skilled at particular tasks, and people outside wage-paying labor markets largely miss out on it.
Category: Unemployment Worldwide