Theme 3

Question 1

Implications of economic growth for individuals and firms​

Answer 1

• Trade opportunities for firms​
• Increased profits
• Rationalisation
• Employment factors

Question 2

Rationalisation

Answer 2

Reorganisation in the scale of a firm’s operations in order to increase efficiency​.

Question 3

(GDP) per capita​

Answer 3

National Income / Population

Question 4

Trade creation

Answer 4

Trade shifts as a result of membership of a trading bloc from a high cost producer to a low cost producer​.

Question 5

Trade diversion

Answer 5

Trade shifts as a result of membership of a trading bloc from a low cost producer to a hig cost producer​ due to no tariffs.

Question 6

Protectionism

Answer 6

When a country takes action to protect its own industries by restricting trade with other countries.

Question 7

Arguments in favour of protectionism

Answer 7

• Infant industries
• Dumping
• Domestic Employment
• Externalities
• Balance of payments

Question 8

Protectionist measures​

Answer 8

- Tariffs
Charge plced on goods an services
- Import Quotas
Physical limit on the volume of imports entering a country ​
- Government legislation​
Complex legal forms
- Domestic Subsidies
Payments to domestic businesses to reduce costs
- Embargoes
Total ban on imported products​

Question 9

Marshall-Lerner condition (MLC)​

Answer 9

Depreciation of the exchange rate will only improve a current account deficit if the sum of the PED for net exports is greater than 1​
- If less it will only worsen

Question 10

Push factors

Answer 10

Force a business to leave the market in which they currently operate.
- Saturated markets
All customers already have the product that business sells
- Competition
Business will struggle to survive in market

Question 11

Pull factors

Answer 11

Attracts a business to a global market.
- Economies of scale
- Risk spreading
Less reliant on 1 market

Question 12

Off-shoring

Answer 12

Occurs when a business relocates production to another country​.

Question 13

Outsourcing

Answer 13

Occurs when a business contracts out production to another business.

Question 14

Factors influencing expansion into a market

Answer 14

• Levels and growth of disposable income​
• Ease of doing business​
• Infrastructure ​
• Political stability​
• Exchange rate​

Question 15

Factors influencing the location of production sites

Answer 15

• Costs of production ​
• Skills and availability of labour force ​
• Infrastructure​
• Location in trade bloc​
• Government incentives ​
• Ease of doing business​
• Political stability ​
• Natural resources ​
• Likely ROI

Question 16

Global marketing strategy

Answer 16

Adaptation of a marketing strategy to target all markets on a worldwide scale.

Question 17

Glocalisation

Answer 17

Adaptation of a global marketing strategy in order to meet the requirements of local geographic markets.

Question 18

Different approaches to global markets: ​ethnocentric​

Answer 18

Promotion of the product is undertaken based on the beliefs of the home nation.

Question 19

Different approaches to global markets: ​geocentric​

Answer 19

Promotion of the product is undertaken based on a global or worldly point of view.

Question 20

Different approaches to global markets: ​polycentric​

Answer 20

Promotion of the product is undertaken based on the beliefs of the host nation.

Question 21

Cultural/social factors

Answer 21

Lifestyle, customs and values of a group of people.​

Question 22

Cultural differences

Answer 22

Occur because different types of people have different lifestyles, customs and values.

Question 23

Multinational corporations​

Answer 23

Business that is operated from one country but has facilities and assets in more than one country​.

Question 24

Impact of MNCs on the local economy

Answer 24

Local Labor
- Jobs with better opportunities and higher wages
- But can create wage inflation and exploit workers
Local Firms
- Imporves infrastructure
- But loss of sales of substitute goods, loss of talented workers
Local Community
- Higher employment, low crime, infrastructure
- But environmental disasters​ and loss of culture

Question 25

Impact of MNCs on the national economy​

Answer 25

- Economic growth - FDI flows - Balance of payments - Technology and skill transfer - More choice for consumers - Tax revenue

Question 26

Ways to control MNCs

Answer 26

- Political influences​ - Legal control​ - Pressure groups​ - Social media​ - Self-regulation​

Question 27

Self-regulation​

Answer 27

Occurs when firms in an industry regulate themselves and monitor their own standards.

Question 28

Employment patterns​

Answer 28

- Increase in living standards - Growth of labor force - Structural change - Interdependence of labor markets

Question 29

Monetary factors

Answer 29

Financial rewards for a worker supplying their labour to a firm​.

Question 30

Non-monetary factors

Answer 30

Non-financial rewards for a worker supplying their labour to a firm​. - Working conditions - Finge benefits - Job satisfaction

Question 31

Factors influencing the supply of labour include

Answer 31

- Population migration​ - Income tax and benefits​ - Government regulations​ - Trade unions

Question 32

Labour immobility

Answer 32

Occurs because it is difficult for labour to be put to alternative uses due to lack of skills or experience​.

Question 33

Derived demand

Answer 33

Occurs as a result of demand for a product.​

Question 34

Individual/Collective bargaining

Answer 34

**Individual** - One employee negotiates with an employer on their own behalf.​ **Collective** - Trade union negotiates with an employer on behalf of all employees.

Question 35

Industrial action

Answer 35

Trade union members engage in activities designed to reduce productivity in the workplace.

Question 36

Poverty

Answer 36

Individuals or households are deprived of material possessions and income which stops them from having a decent standard of living​.

Question 37

Absolute poverty

Answer 37

Individuals or households are deprived of basic human needs​.

Question 38

Relative poverty

Answer 38

Individuals or households are poor in comparison to the rest of the population​.

Question 39

Causes of poverty​

Answer 39

- Age - Low wages and unwaged

Question 40

Measures of poverty​

Answer 40

- Income - Consumption - Material deprivation

Question 41

Economic development

Answer 41

The process of improving people’s economic well-being and quality of life.​

Question 42

Factors that improve development​ and growth​

Answer 42

- Investment - Education - Training

Question 43

Barriers to development and growth ​

Answer 43

- Corruption - Institutional factors​ - Poor infrastructure - Poor human capital

Question 44

Aid

Answer 44

Voluntary transfer of resources from one country to another​.

Question 45

Types of aid​

Answer 45

- Emergency Aid / Disaster Relief​ - Tied Aid​ Country donates money/resources with conditions - Bilateral Aid​ Assistance given by a government directly to the government of - Multilateral Aid​ Assistance provided by many governments - Developmental Aid​ Funds are used to finance a particular project - Debt Relief​

Question 46

Income/Wealth inequalities

Answer 46

Income Inequlities - Difference in the earnings people receive Wealth Inequalities - Difference in the amount of assets owned by people

Question 47

Income/Wealth

Answer 47

Income - Flow of earnings of individuals or households.​ Wealth - Stock of financial assets e.g. houses owned by individuals or households.​

Question 48

Progressive/Regressive tax

Answer 48

Progressive tax - Higher rate of tax is paid as incomes increase. Regressive tax - Lower rate of tax is paid as incomes increase. ​