Globalisation

Question 1

Terms of trade equation

Answer 1

Average price of exports/ average price of imports

Question 2

International competitveness explain

Answer 2

High exportation= high competitveness

Current account deficit implies low competitiveness as having to import highly

Question 3

Absolute advantage

Answer 3

Countries ability to produce a good at a higher rate with less inputs than other economies

Question 4

Comparative advantage

Answer 4

One country can produce a good at a lower opportunity cost than another

Question 5

Marshall Lerner condition

Answer 5

States that a devaluation of a currency leads to improvement in current account due to greater exports although the PED of imports and exports must be greater than 1

Question 6

Causes of globalisation

Answer 6

Improved transport
Improved technology
Growth of MNC’s- FDI

Question 7

Advantages of international trade to all countries

Answer 7

Faster economic growth
Cheaper products - EOS
Comparative advantage
Job creation
Accessibility

Question 8

Disadvantages of international trade

Answer 8

Exchange rate risks

Export trap- primary and secondary

Cultural complications

External shocks

Question 9

International competitiveness

Answer 9

Relative price of a countries exports

Higher price lower competitiveness

Question 10

Role of WTO

Answer 10

Helps trade flow as freely as possible

GATT- general agreement on tarrifds and trade

Question 11

Impact of emerging economies on others

Answer 11

Economic growth through their exports being cheaper 80% of global growth 60% of global GDP

Huge imports creating jobs reducing unemployment