4.1 international economics

Question 1

antonym of of globalisation

Answer 1

protectionism

Question 2

globalisation definition

Answer 2

greater integration & interconnectedness between countries

Question 3

tech factor of increased globalisation

Answer 3

drop in transport costs, death of distance

Question 4

MNCs

Answer 4

has business operations in two or more countries. These companies are often managed from and have a central office headquartered in their home country

Question 5

opportunities MNCs provide for the community

Answer 5

infrastructure (transport as well as training workers)

diversification of industries

Question 6

negative of MNCs

Answer 6

impact on small firms
environmental impact
exploitation
taxation

Question 7

free trade definition

Answer 7

no restrictions on the flow of goods and services between countries

Question 8

absolute advantage

Answer 8

when country a can produce a good or service using fewer resources than that of another country

Question 9

comparative advantage

Answer 9

an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners

Question 10

SPICED

Answer 10

strong pound imports cheaper exports dearer

Question 11

factors that influence patterns of trade CETE

Answer 11

comparative advantage
emerging economies
trading blocs
exchange rates

Question 12

factors that influence patterns of trade: comparative advantage

Answer 12

cheap production/lower inflation pressure/general unemployment

Question 13

factors that influence patterns of trade: emerging economies

Answer 13

integration in competitive markets & increased wealth for citizens
creation of jobs & reduction of poverty

Question 14

factors that influence patterns of trade: growth in trading blocs

Answer 14

removes barriers to trade

Question 15

factors that influence patterns of trade: exchange rates

Answer 15

appreciation in the exchange rate will lead to a fall in exports as the price as the price of UK goods and services abroad will go up

dependant on the elasticity of the product

Question 16

formula for terms of trade

Answer 16

index of export prices / index of import prices

e/i

Question 17

free trade areas

Answer 17

where members either reduce or elimate trade barriers. trade liberalisation

Question 18

customs unions

Answer 18

members agree to remove trade barriers amongst themselves & agree on a common approach to trade barriers where other countries are involved. they act as a homogenous group

Question 19

common markets

Answer 19

removal of trade barriers & freedom of labour & movement within the bloc.
usually also agreements of common economics policies & capital

Question 20

monetary unions

Answer 20

independant countries that share a single currency

Question 21

requirements to join the eurozone

Answer 21

fit in the convergence criteria eg. stable inflation, govt deficiet, exchange rates doesn’t change, interest rates

Question 22

types of restrictions on free trade

Answer 22

tariffs quotes subsidies embargos

Question 23

types of non tariff barriers to free trade

Answer 23

complex legal forms, inspections

Question 24

reasons for protectionism to protect lay people

Answer 24

protect domestic jobs
externalities (like illegal goods entering the country)
prevent dumping
country nationalism

Question 25

govt reasons for protectionism

Answer 25

protect infant industries revenue from tariffs balance of payments country nationalism

Question 26

graph for tariffs highlights

Answer 26

increase in consumer surplus outside triangle lost govt revenue in teh middle net welfare gain on each side

Question 27

FDI

Answer 27

foreign direct investment. the establishment of operations in other countries. long term capital investment flow. more active

Question 28

portfolio investment

Answer 28

the purchase of financial assets in another country eg. bonds or securities

Question 29

primary income

Answer 29

net income flow made up of investment income from profits, interest + dividents between countries

Question 30

secondary income

Answer 30

current transfers of income arising from gifts brtween residents, donations + overseas aid + transfers between the uk and the eu

Question 31

components of the balance of payments

Answer 31

current financial capital net errors + ommissions

Question 32

reasons for current acc deficit

Answer 32

high propensity to import weak product + price competitiveness high exchange rates weak productivity

Question 33

reasons for current acc surplus

Answer 33

low propensity to import strong product + price competitiveness low exchange rates strong productivity

Question 34

devaluation

Answer 34

reduction of the value of a currency against other by reducing interest rates or selling reserves will boost price competitiveness + reduce demand for imports

Question 35

deflationsionary poliices

Answer 35

reducing inflationary pressure on the economy improves price competitiveness of exports thus reducing demand for imports

Question 36

direct controls as a response to current acc imbalance

Answer 36

seeking control of expenditure on imports. think bans quotas tarriffs

Question 37

policies to reduce expenditure might work like

Answer 37

raising taxes to reduce disposable cinome + demand encourage consumers to switch their demand to domestic goods eg. think buy british campaigns

Question 38

worker focused way to balance current acc

Answer 38

increase producitivity like investment in human capital , subsidies on tech

Question 39

what does a global trade imbalance tell us

Answer 39

lack of competitiveness + general suffering

Question 40

possible response to world trade imbalance

Answer 40

move to protectionism? protecting oneself WTO rules to prevent move to protectionsim offset by other accounts depreciation of currency

Question 41

marshall lerner condition

Answer 41

states the current account will only improve if the sum of elasticities of imports + exports is >1 if demand is highly inelastic, thus will not be sensitive to price and therefore deficit may worsen before it improves. think smiley face

Question 42

three systems of exchange rates

Answer 42

fixed floating mixed

Question 43

different between appreciation and revaluation

Answer 43

appreciation under floating | revaluation under fixed

Question 44

difference betweeen depreciation and devaluation

Answer 44

depreciation under floating | devaluation under fiixed

Question 45

3 bad boy factors influencing terms of trade

Answer 45

exchange rates inflation rates price elasticity

Question 46

impact of change in terms of trade

Answer 46

idrk could go either way. think it through

Question 47

big 4 factors impacting the growth of globalisation

Answer 47

trade agreements improved tech reduced tariffs & protectionism global trading blocs