Explain what the term soft loans mean. Soft loans are made to developing countries and probably will never be paid back.

Why is it important for all nations to develop economically? Economic well being helps create political and social stability.

What are the major obstacle to economic growth in developing countries? Excessive population growth, limited natural resources, disease and substance abuse, lack of education and technology, external debt, corruption, war, and capital flight (the legal or illegal export of a nation’s currency and foreign exchange).

How is economic development in developing countries financed? Organizations such as the IMF (International Monetary Fund) and the World Bank; private investments; foreign government grants.

How are free-trade area and a custom union alike and different? Both comprise countries that have agreed to reduce trade barriers. Members of a free-trade area group do not have a common tariff barrier for nonmembers. Members of a custom union do have uniform tariffs for nonmembers.

Name 4 global institutions and briefly describe how they each affect the global market. WTO (World Trade Organization)- settle disputes over trade tariffs. IMF (International Monetary Fund)- offers advice and financial assistance to nations so that their countries can compete in open markets. UN (United Nations)- helps preserve peace through international cooperation and economic development projects. World Bank- helps developing countries join global markets as part of their economic development strategy. Provides technical assistance, financial support, and grants for infrastructure improvements.

What is globalization? Globalization is a movement towards a more integrated and interdependent world economy.

How do agreements for regional cooperation help member nations? These agreements help open up markets within the members nations by reducing trade barriers and encouraging cooperation.

Why is economic integration important in a global economy? Economic integration allows nations and businesses to specialize, producing what they can produce most efficiently, which leads to global growth.

How do economic incentives relate to population growth? The cost of raising children induces many people in developed nations to have fewer children, and the value of having children in developing nations induces many people to have more.

Why is it important to conserve nonrenewable resources? Present consumption levels cannot be continued because the supply of non-renewables will be depleted and cannot be replaced.

What measures can be taken to control pollution? The government can pass laws and regulations establishing pollution standards, assess taxes and fees, and sell tradable pollution permits.

What is the difference between a secured credit card and an unsecured credit card? A secured credit card is limited to the amount one deposits in an account. An unsecured credit card is not limited to the balance of any account.

How do financial institutions affect your own budget? Financial institutions pay interest on savings and charge interest on borrowed funds.

What should you understand about the rules of borrowing money from financial institutions? Keep a good credit rating to negotiate a lower interest rate, pay more than the minimum monthly payment, pay on time, check monthly statement for errors.

Why is the role of an investor an important part of the economy? Investors provide funds for capital, which businesses use to produce goods and to hire workers. Rising employment increases demand for more goods and services, which results in economic growth.

What does it mean to default on a loan? The borrower has not repaid the borrowed money.

Why are there so many different methods available to help you fund more education? Differing levels of incomes in the country require differing options of funding education. One goal of government is to invest in human capital by providing education. More education also leads to higher salaries, higher tax bases, and a potentially growing economy.

What information do you need to be aware of when preparing to rent a house? How much to pay for rent, additional expenses such as utilities, amenities, the amount of the security deposit and whether the first and last months’ rent are required, length of lease, pet deposit (if allowed), pet rent, renters insurance.