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Flashcards in 2.4 Life in a Global Economy Deck (63)
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1

Define Globalisation

The growing interconnectivity of different countries stemming from an improvement in communication and trade

2

Define FDI

Big businesses investing in new markets

3

What 2 things does FDI do for an economy?

- Creates jobs
- Enhances prosperity

4

How do some governments encourage investment into their country?

Offer incentives for investors like reduced tax

5

Define 'World Trade and GDP'

Measure of output and income

6

How has World Trade changed with globalisation?

It has become easier and therefore more common

7

How has globalisation affected the GDP of smaller countries?

Increased

8

How has globalisation led to increased migration?

International trade enhances competition so social structures change as more skilled workers are required

9

Give the 5 factors that have led to globalisation in the last 50 years?

- Trade Liberalisation
- Capital Market Liberalisation
- Political change in the USSR and China
- Reduced cost of travel and transport
- Increased significance of global transnational companies

10

Explain what Trade Liberalisation is

Trade becoming easier and more common

11

How has Trade Liberalisation led to globalisation?

Makes markets more competitive and increases exports

12

What is Capital Market Liberalisation?

Moving large sums of money from one economy to another

13

How has Capital Market Liberalisation led to globalisation?

More free trade has fostered economic growth

14

How can Capital Market Liberalisation be bad for the global economy?

A disaster in one country is going to have a big effect in other countries

15

When did the USSR collapse?

1989

16

Why has the cost of travel and transport fallen?

Advancements in technology have made it easier and cheaper

17

How is globalisation important in dynamic markets?

It allows businesses to quickly make decisions and communicate quickly

18

Define containerisation

The advancement of technology of using container ships

19

How has the increase of transnational companies led to globalisation?

Retailers have been able to shop around for cheaper products in wider markets

20

What is the fact that can be used in explaining the increase of transnational companies?

Some firms have GDP higher than entire countries

21

Define what is meant by a 'Developed Country'

A country that has industrialised long ago and has very high living standards

22

Give 3 characteristics of a 'Developed Country'

(Primary, Tertiary, Skilled workers)

- Small Primary Sector
- Large Tertiary Sector
- Highly skilled and educated population

23

Give 5 characteristics of a 'Developing Country'

(Primary, Secondary, Skilled workers, Welfare Sector, Labour)

- Large Primary Sector
- Small Secondary Sector
- Unskilled Workforce
- Small Welfare Sector
- Labour intensive

24

Give 4 characteristics of an 'Emerging Economy'

(Economic Growth, Living Standards, Expansion, Migration)

- Very high economic growth
- Rapidly rising living standards
- Expansion fastest in manufacturing
- Huge rural to urban migration

25

Give the 5 main indicators of economic growth

- HDI (Human Development Index)
- GDP per Capita
- Literacy Rate
- Health
- Mean/Median incomes

26

Give 1 reason that someone would measure economic growth with GDP per capita

Gives an average income that's easily comparable with other countries

27

Give 2 reasons why it could be bad to measure economic growth with GDP per capita

- Exchange rates skew the data
- Won't account for the hidden economy

28

Give 1 reason that someone would measure economic growth with the Literacy Rate

Shows the government's investment into education

29

Give 2 reasons why it could be bad to measure economic growth with the Literacy Rate

- Can be difficult to measure
- Doesn't only show economic growth

30

Give 2 reasons that someone would measure economic growth with Health

- Shows government investment into healthcare
- Can be reflective of wages (healthcare isn't free)

31

Give 2 reasons why it could be bad to measure economic growth with Health

- Can be misleading
- Doesn't only show economic growth on its own

32

What is the HDI?

A composition of Gross National Income with life expectancy and schooling years

33

What range of numerical values can the HDI take?

0-1 scale

34

Give 2 reasons that someone would measure economic growth with the HDI

- Easily collectable data
- More representative than a factor on its own

35

Give 2 reasons why it could be bad to measure economic growth with the HDI

- Doesn't show spread
- Doesn't show unemployment

36

Give 1 reason that someone would measure economic growth with Mean/Median incomes

Can provide some additional information about income distribution and living standards

37

Give 1 reason why it could be bad to measure economic growth with Mean/Median incomes

Can't tell the effects of inequality

38

Define specialisation

When an individual, firm or country concentrates on the production of a limited range of goods

39

Give an advantage of specialisation for a business

- Gain a competitive advantage through pricing

40

Give 2 advantages of specialisation on an economy

- Jobs created
- Exports increase which increases AD

41

Give a disadvantage of specialisation

Risk isn't spread

42

Define Comparative advantage

A natural ability to produce a good for a lower cost than competitors (e.g. tropical countries with tropical fruits)

43

Define Absolute advantage

An ability for a country/firm to produce a product using less resources than another

44

Define Trading Bloc

The umbrella term for groups of countries that come together to conduct free trade

45

Give the 3 types of Trading Bloc

- Free Trade Area
- Common Market
- Single Market

46

Define Free Trade Area

Groups of countries that trade freely with few or no trade barriers

47

Give the 2 features of a Common Market

Free international Trade
Free Movement of Goods and People

48

What is meant by a single market?

Member countries agreeing to harmonise their regulations so all businesses are on a level playing field

49

Give 2 advantages for a business of being in a Trading Bloc

- Encourages Efficiency as competition increases
- No retaliation through tariffs or anything

50

Give an advantage for the economy of being in a Trading Bloc

Exports increase which boosts AD

51

Give a disadvantage for the economy of being in a Trading Bloc

Imports alos increase which reduces AD through the BOP

52

Give 2 disadvantages for a business of being in a Trading Bloc

- Limits them to trade with only member countries
- Consumer choice is expanded so demand may fall as cheaper alternatives are discovered

53

Define visible import

Tangible goods that have to be driven through the channel tunnel or air-freighted

54

Define Invisible import

Services (e.g. tourism, finance)

55

Give an advantage of being in a common market for a business in terms of competitive advantage

Can find workers from abroad with the same skill set who will work for less

56

Define depreciation

When the market value of a currency falls against another

57

Define appreciation

When the market value of a currency rises against another

58

Draw the graph for appreciation

see poster

59

Draw the graph for depreciation

see poster

60

What is the effective exchange rate?

A weighted index of exchange rates which rolls all foreign currencies together in proportion to their relative importance in the economic trade pattern

61

What does a rising figure in the effective exchange rate mean?

They are less likely to be competitive

62

What does a falling figure in the effective exchange rate mean?

Depreciation

63

What is the result of depreciation on the BOP?

- more exports
- less imports