TRADE

Question 1

Four Factors That Influence Patterns of Trade

Answer 1

comparative advantage, emerging economies, trading blocs, exchange rates.

Question 2

Impact of Comparative Advantage on Pattern of Trade

Answer 2

If a country has a comparative advantage in a good, they will export more of it.

Question 3

Impact of Emerging Economies on Pattern of Trade

Answer 3

There has been an increase in exports and imports from the emerging economies; Brazil, Russia, India, China and South Africa.

Question 4

Impact of Trading Blocs on Pattern of Trade

Answer 4

Trading blocs can lead to trade creation and trade diversion.

Question 5

5. Impact of Exchange Rates on Pattern of Trade

Answer 5

An exchange rate appreciation will lead to an increase in imports and a decrease in exports.

Question 6

3 affect of high export prices

Answer 6

AD shifts left
unemployment
trade defecit

Question 7

What is the role of the WTO

Answer 7

An organisation that resolves trade disputes and encourages trade liberlisation

Question 8

What is bilateral trade

Answer 8

Trade between 2 countries or trading blocs

Question 9

What is the most favoured nation principle

Answer 9

countries cannot discriminate between their trading partners

Question 10

3 conflicts between WTO and trading blocc

Answer 10

• trade diversion so distorts trade
• negative impact on non member countries
• May lead to protectionist policies between different trading blocs

Question 11

similarities between WTO and trading blocs (3)

Answer 11

• seek trade liberalisation
• trade creation
• specialisation and division of labour

Question 12

Why do countries set protectionist measures (3)

Answer 12

• prevent dumping
• preserve jobs
• help infant industries

Question 13

What are the protectionist measures

Answer 13

• tarrifs
• quotas
• health regulations
• environment regulations
• subsidies

Question 14

WHat is dumping

Answer 14

Predatory pricing on an international level.Exported goods that are sold below their domestic cost in the exporting country

Question 15

what are the restrictions of quotas

Answer 15

no tax revenue

shortgaes

Question 16

How do subsidies restrict trade

Answer 16

they lower price of exports/ domestic price so more consumers buy the domestic good

Question 17

significance of a trade defecit

Answer 17

• surplus on capital and financial account
• countries invest in our country
• especially bonds
• country in debt to another country
• can affect decisions

Question 18

causes of a trade deficit / surplus (5)

Answer 18

• inflation
• exchange rate
• growth
• quality
• productivity

Question 19

Why is lowering interest rates an expenditure switiching policy

Answer 19

Hot money will flow out
supply of £ increases
lowering exchange rate
making imports more expensive so customers will switch

Question 20

Types of policy to reduce current account defecit (3)

Answer 20

expenditure reducing
expentiture switching
supply side policies

Question 21

supply side policy example for reducing defecit

Answer 21

reducing corporation tax shift SRAS and LRAS to right lowering price increasing competitiveness

Question 22

Why is venuluela in hypeinflation

Answer 22

Nearly 3000% in 2020 due to heavy quantitative easing , raising minimum wage in 2014

Question 23

one industry the us subsidieses ans some facts

Answer 23

farming $19 billion dollar a year in 2014
It paid farmers to make sure supply did not exceed demand. The government subsidized farmers to keep croplands idle in order to prevent overproduction. It also bought excess crops. It then either stored them or gave them away to feed low-income people throughout the world.

Question 24

Why may the US subsidy to farming be unsucessful

Answer 24

15% was wasteful