2.2 The Global Economy Unit 35 - 39 Flashcards
(46 cards)
1
Q
- What is globalization?
A
it is the growing interconnection of the world’s economies.
2
Q
- What is interdependence?
A
- where the actions of one country or large firm will have a direct effect on others.
3
Q
- What are the 5 features of globalization?
A
- goods and services are traded freely across international borders.
- free to live and work in any country they choose.
- high level of interdependence between nations.
- capital can flow between different countries.
- the free exchange of technology and intellectual property.
4
Q
- What are the four reasons for globalization?
A
- fewer tariffs and quotas
- reduced cost of transport
- reduced cost of communication
- increased significance of multinationals
5
Q
- What is a saturated market?
A
market in which there is more of a product for sale than people want to buy.
6
Q
- Who are the 6 things affected by globalisation?
A
- individual countries
- governments
- producers
- consumers
- workers
- the environment
7
Q
- What are the 6 advantages to individual countries of globalization?
A
- high GDP
- growth
- contribute and increase wealth in the country
- more output
- high employment
8
Q
- What is the disadvantages to an individual country of globalization?
A
- due to interdependence economy can be affected badly.
9
Q
- What are the 4 advantages to a producer of globalization?
A
- access to huge markets.
- lower costs.
- access to labor.
- reduced taxation.
10
Q
- What are the 5 advantages of consumers of globalization?
A
- cheaper goods
- wider choice
- latest technology
- quality of goods
- improved living standards.
11
Q
- What are the 3 advantages to workers of globalization?
1 disadvantage to workers?
A
Ad:- more job opportunities
- learn new skills
- can get paid more
Dis: offshoring:- practice of getting work done in another country in order to save money.
12
Q
- What is a disadvantage of globalization to the environment?
A
unsustainable economic growth:- economic that is not possible to sustain without causing environmental problems.
13
Q
- What is the 2 advantage of globalization to the government?
A
- increase in tax revenue
- encouragement of starting up new business.
14
Q
- What are multinational corporations?
A
- companies that operate in many different countries.
15
Q
- What are the 6 features of MNCs?
A
- Huge assets
- highly qualified and experienced professional executives and managers.
- powerful advertising and marketing capability.
- highly advanced and up-to-date technology.
- highly influential both economically and politically.
- very efficient since they can exploit huge economies of scale.
16
Q
- What is Foreign Direct Investment? (FDI)
A
FDI, or inward investment, occurs when a company makes an investment in a foreign country.
17
Q
- What are the 4 reasons for the emergence of MNCs/ FDI?
A
- economies of scale
- access to natural resources/ cheap materials.
- Lower transport and communication costs.
- Access to customers in different regions.
18
Q
- What are the four ways governments actively seek FDI?
A
- offering tax breaks, subsidies, grants, and low-interest loans
- lifting restrictions and relaxing regulations to make investing easier for foreign firms
- investing in their own infrastructure.
- investing in education so that people can get jobs in foreign countries.
19
Q
20, What are the 5 advantages to governments of MNCs and FDI?
A
- Job creation
- investment in infrastructure.
- developing skills.
- developing capital
- ## contributing to taxess
20
Q
- What is tax avoidance?
A
- practice of trying to pay less tax in legal ways.
21
Q
- What is repatriation?
A
- where a multinational returns the profits from an overseas venture to the country where it is based, typically from a developing country to a developed country
22
Q
- What are reserves?
A
- are the amount of something valuable, such as oil, gas…
23
Q
- What are the 3 disadvantages of governments of MNCs/ FDIs?
A
- Tax avoidance
- environmental damage
- moving profits abroad.
24
Q
- What is international trade?
A
international trade is trade between nations.
25
26. What are the 3 reasons for international trade?
- obtaining goods that cannot be produced domestically.
- obtaining goods that can be bought more cheaply from overseas.
- selling off unwanted commodities.
26
27. What is free trade?
- situation in which the goods coming into or going out of a country are not controlled or taxed.
27
28. What are the 3 advantages of free trade?
- lower prices and increased choice for consumers.
- lower input prices.
- wide markets for businesses.
28
29. What are 2 disadvantages of free trade?
- competition for domestic businesses.
- unemployment in domestic firms.
29
30. What is protectionism?
- approach used by governments to protect domestic producers
30
31. What is dumping?
- where an overseas firm sells large quantities of a product below cost in the domestic market.
31
32. What are trade barriers?
- measures designed to restrict imports.
32
33. What are the 7 reasons for protectionism?
- prevent dumping
- protecting employment
- protecting infant industries
- to gain tariff revenue
- preventing the entry of harmful or unwanted goods.
- reduce current deficits.
- retaliation
33
34. What are infant industries?
new industries yet to establish themselves.
34
35. What are the 3 methods of protectionism?
- tariffs
- quotas
- subsidies
35
36. What are tariffs/ custom duties?
- a tax on imports to make them more expensive.
36
37. What is embargo?
official order to stop trade with another country(it is an extreme form of a quota)
37
38. What is quota?
- physical limit on the quantity of imports allowed into a country.
38
39. What is bi-lateral trade agreement?
trade deal between only 2 countries.
39
40. What impact do tariffs and quotas have on a. Import quantity? b. Price of imports. c. demand on imports?
-a. reduces import quantity
-b. increase the price of imports
-c. reduction in demand for imports.
40
41. What impact do subsidies have on producers?
it helps them to produce more, or they are forced to reduce prices.
41
42. What is a trading bloc?
- groups of countries situated in the same region that join together and enjoy trade free of trade barriers.
42
43. What are the 5 types of trading bloc?
define
- Preferential Trading Areas(PTAS) :- this type of arrangement means that members agree to remove trade barriers on a range of goods and services.
- Free Trade Areas:- trade between members of an FTA is completely free of trade barriers.
- Custom unions:- A customs union is a type of trade bloc that is composed of a free trade area with a common external trade barrier.
- Common markets:- a group of countries imposing few or no duties on trade with one another and a common tariff on trade with other countries, also allowing free movement of labor and capital.
- Economic unions:- An economic union is a free movement of goods, services, money, and workers between nations, facilitated by coordinating social and financial policies.
43
44. What are the advantages of trading blocs on member states?(6)
-- goods will be cheaper
-consumer choice
- faster economic growth
- exploit economies of scale
- extra competition improves the quality of goods and encourages innovation.
- reduces border conflict.
44
45. What are the 5 disadvantages of trading blocs on member states?
- financial cost to the government.
- exploit consumers in the bloc.
- rely too heavily on trade within the bloc.
- also miss out on opportunities in other world markets
- inefficient producers may be protected from businesses outside the trade bloc then consumers might end up paying more for goods and services.
- unequal resources leading to political tension.
45
46. What is a disadvantage of trading bloc on a non-member states?
- will face common trade barriers and may be forced to find new markets.
46
47. What are the 3 examples of trading blocs?
- NAFTA(north American Free Trade Agreement) :- the USA, Canada and Mexico.
- ASEAN(association of southeast Asian nations) :- Thailand, Vietnam, Malaysia, Indonesia, the Philippines, and Singapore.
- SACU( South African Customs Unions):-(bostswana, Lesotho, nambia
