Global Economics

Question 1

Advantages and disadvantages of free trade?

Answer 1

Advantages 
More competition 
Cheaper goods
More choice 
Spread of culture 
Specialisation - more efficient 
Better trade relations 

Disadvantages
Drives out domestic firms 
Potential jobs losses
Dependent 
Import goods that aren’t good for society 
No control - friction 
Environmental damage

Question 2

Difference between absolute advantage and comparative?

Answer 2

Absolute - the ability of an individual or group to carry out a particular economic activity more efficiently than another individual

Comparative - ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.

Question 3

AD and DIS of globalisation

Answer 3

Ad- 
Protect infant firms 
Jobs in domestic firms 
Less competition
Less efficiency 
Trade balance 
Taxation revenue

Dis -
Retaliation
Higher prices leads to job losses
Decrease in efficiency

Question 4

Key methods of protectionism - what diagram?

Answer 4

Tariffs
Embargo’s
Red tape
Quotas 
Subsidies 

Tariff diagram

Question 5

What is globalisation?

Answer 5

A deeper integrated economy driven by advance in technology and communication leading to interdependence and cross balance

Question 6

Benefits and drawbacks of globalisation

Answer 6

Benefits 
Free movement of labour 
Increased income per capita 
Economies of scale
Cheaper goods
Competitiveness

Drawbacks
Pollution
Racial tension 
LEDCs lack of safety
Dominant brands

Question 7

What are the UKs major exporting industries?

Answer 7

Vehicles 
Machinery
Pharmaceuticals
Financial services
Aircrafts

Question 8

What is the role of WTO?

Answer 8

Promote free trade
Set agreements
Intervene disputes

Question 9

What problems might MEDC face?

Answer 9

Deflation
Ageing population
Pollution
Decline of industries/unemployment

Question 10

What problems might an emerging market face?

Answer 10

Fast pace growth

Increased wages - demand pull

Question 11

What is the EU?

Answer 11

A political and economic union, with 28 members

Question 12

AD and DIS of the EU

Answer 12

Advantages
Free trade
Peace
Currency

Disadvantages
Refugee crisis
Loss of independency

Question 13

What is the EMU?

Answer 13

Part of the Euro - base rate

Allocation of resources

Question 14

Positives and negatives of being part of the EMU?

Answer 14

P
Price transparency
No transaction costs
Improvement of trade

N
No control over monetary policy
Loss of economy sovereignty

Question 15

What are the terms for the optimal currency area?

Answer 15

Same trade cycle
Geographical
Language - flexibility 
Capital flowing freely
Fiscal transfers

Question 16

What is economic development?

Answer 16

Life sustaining goods and services
Freedom of choices
High incomes

Question 17

GDP and GNP

Answer 17

GDP - growth domestic product, by own firms, economic growth

GNP- GDP + any net income from abroad

Question 18

What is purchasing power parity adjustment?

Answer 18

Looking at currency value taking out exchange rate variances

Question 19

HDI? How is it calculated?

Answer 19

Human development index 
Life expectancy- long and healthy life 
Education 
GNI 
=mean

Question 20

What are the UN millennium development goals?

Answer 20

Eradicating extreme poverty and hunger
Primary education 
Gender equality
Child mortality 
Maternal health 
HIV/AIDs diseases 
Environments
Global partnerships

Question 21

How is the resource curve an obstacle

Answer 21

Reliant on the industry, currency goes up, bad for other industries tomatoes

Question 22

Low levels of health and education?

Answer 22

Unskilled work force, low wages, poor health

Question 23

Low life expectancy?

Answer 23

Cannot work for as long

Question 24

Poor infrastructure?

Answer 24

Trade less easy, lost increase difficulty to move goods around

Question 25

Technology

Answer 25

Less innovation, old processes - slow

Question 26

Poor government

Answer 26

Revenue back on debts, less spending

Question 27

Rapid population growth

Answer 27

More people to provide for- high taxes for govt spending | High pollution

Question 28

Absolute poverty?

Answer 28

Survival - malnutrition - impacts on the brain and workforce

Question 29

Solutions to obstacles

Answer 29

``` Foreign aid Debt relief Trade liberalism Tourism Government subsidies FDI privatisation Buffer stock Infrastructure ```

Question 30

Ad and disadvantages of limitations

Answer 30

``` Doesn’t consider how free people are politically, Hunan rights, gender equality or people cultural identity Doesn’t take environment into account Doesn’t consider distribution on income Allows for comparison Much broader comparison than GDP ```

Question 31

Jarrod- domar model

Answer 31

States that investment, saving and technological change are required in an economy for economic growth, the rate of growth increases if the saving ratio increases, this leads to increased investment and technological progress, which leads to higher productivity Limitations Low marginal prosperity so save in some countries or that there might be poor financial system, funds might not lead to borrowing and investment

Question 32

Barriers to growth and development

Answer 32

``` Saving gaps Foreign currency gap Capital flight Demographic factors Debt Access to credit Infrastructure Education/skills Absence of property rights Corruption Poor governance Vulnerability to external shocks ```

Question 33

Raising economic development

Answer 33

``` Trade liberalism Promotion of FDI Microfinance schemes Privatisation Infrastructure Tourism Debt relief foreign aid Fair trade systems ```