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Economics > Theme 4 > Flashcards

Theme 4 Flashcards

1
Q

Name 4 Causes of Globalisation

A
  • A Fall in Transport Cost
  • A Fall in Cost of Communication
  • A Reduction in the World Barriers
  • Fall of Communism
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2
Q

Name 2 Benefits of Globalisation

A
  • Increase in Supply of Goods + Services
  • Helps Economy grow
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3
Q

What are 3 Drawbacks of Globalisation

A
  • Lead to Increased Environmental Damage
  • Exploitation of LEDs
  • Inequalities
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4
Q

What is meant by Comparative Advantage

A

When a country can produce a good or service at a lower opportunity cost to another

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5
Q

What are 4 Factors that affect the Pattern of Trade

A
  • Emerging Economies
  • Growth of Trade Blocs
  • Changes in Exchange Rates
  • Comparative Advantage
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6
Q

How do you work out Index of Terms of Trade

A

Index of Export Prices / Index of import Prices x 100

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7
Q

What can Influence a country’s Terms of Trade

A
  • Exchange Rates
  • Incomes
  • Technology
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8
Q

What is a Free Trade Area

A

An area where trade is free with no barriers of tariffs

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9
Q

What is a Customs Union

A

Free trade with a common external tariff

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10
Q

What is a Common Market

A

A trade area with common policies on product regulation

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11
Q

What is a Monetary Union

A

A group of Counties that agree to share a common currency

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12
Q

Define Aid

A

When a country voluntarily transfer resources to another country or gives them loans

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13
Q

What is Absolute Poverty

A

People who earn less than $1.90

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14
Q

Define a Market Bubble

A

The price of the product exceeds the value of the product

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15
Q

What is meant by Market Rigging

A

The process of colluding and fixing prices at the expense of others

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16
Q

Define Moral Hazard

A

When the person taking the risk is not the one who bears the consequence of it

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17
Q

Define Absolute Advantage

A

When a country can produce two products at a lower opportunity cost than the other

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18
Q

Define Trade Liberalisation

A

The removal of trade barriers to increase growth and development

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19
Q

What are 3 Market Orientated Strategies that might influence growth and development

A
  • Trade Liberalisation
  • Removal of Government Subsidies
  • Microfinance Schemes
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20
Q

What are the components of HDI

A
  • Health (Life Expectancy)
  • Education (Years of Education)
  • Living Standards (GNI per Capita)
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21
Q

Define Devaluation

A

The selling of domestic currency to reduce the value

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22
Q

Define Appreciation

A

The buying of Foreign currency to increase the value of your domestic currency

23
Q

Define Protectionism

A

Putting up trade barriers to protect infant industries so that they can develop

24
Q

Define FDI

A

Includes investment by foreign firms into a domestic business

25
Q

What is meant by Removal of Government Subsidies

A

Reduces spending on inefficient subsides so that it can be redirected to health + education

26
Q

Define Buffer Stock Schemes

A
  • It ensure price stability of a product
  • It buys the product when price goes below floor to raise demand
  • Government sells product when it goes above ceiling to raise supply
27
Q

Define Microfinance

A

Very small loans given to individuals who are not able to access loans

28
Q

Define Privatisation

A

The selling of state owned enterprises to the private sector

29
Q

Define Infrastructure Development

A

The spending of money on Transport, Communication and Energy

30
Q

What is meant by the Development of Human Capital

A

Developing the quality and accessibility of education to raise skills in the economy

31
Q

State 3 Interventionist Strategies

A
  • Infrastructure Development
  • Development of Human Capital
  • Buffer Stock Schemes
32
Q

What are the 4 Market Failures in the Financial Sector

A
  • Asymmetric Information
  • Moral Hazards
  • Market Bubbles
  • Market Rigging
33
Q

What is the Role of the Financial Market

A
  • Facilitate Saving and Lending
  • Facilitate Exchange of Goods and Services
  • To provide a Forward Market in Commodities and Contracts
  • To provide a Market for Equities
34
Q

What is meant by the Facility to Exchange Goods and Services as a Role of the Financial Market

A

The ability to make payments, receive wages and pay debts

35
Q

What is meant by Providing the Market for Equities mean as a Role of the Financial Market

A

Allowing stocks and shares to be issued and traded

36
Q

What is meant by Providing Forward Markets in Commodities and Contracts as a Role of the Financial Market

A
  • Allows locking of prices to reduce uncertainty
  • Contracts allow protection from exchange rate fluctuations
37
Q

What are the Roles of Central Banks

A
  • Implementation of Monetary Policy
  • Banker to the Government
  • Banker to Banks
  • Role of Regulation in the Banking Industry
38
Q

What is meant by Implementation of Monetary Policies as a Role of the Central Bank

A

Responsible for putting in place Monetary Policies

39
Q

What is meant by Banker to the Government as a Role of the Central Bank

A

The central bank has to manage the accounts of the Government

40
Q

What is meant by Banker to Banks as a Role of the Central Bank

A

Supplying loans to Banks when in financial difficulties to maintain the stability of the banking system

41
Q

What is a Progressive Tax

A

Proportion of tax payed increases as income rises

42
Q

What is a Regressive tax

A

Proportion of tax payed falls as income rises

43
Q

Define Proportional Tax

A

Proportion of tax payed stays the same as income rises

44
Q

2 Examples of Direct Tax

A
  • Income Tax
  • Corporation Tax
45
Q

2 Examples of Indirect Tax

A
  • VAT
  • Excise duties
46
Q

Define Automatic Stabilisers

A

Changes of Tax Revenue and Government Spending when GDP rises or falls without Government Intervention

47
Q

Define Discretionary Fiscal Policy

A

Changes in Government Spending and Taxation due to Government Intervention

48
Q

What is the difference between Fiscal Deficit and National Debt

A
  • Fiscal Deficit is where Government Spending is greater than Tax Revenue
  • National Debt is the total cost of the Governments Borrowing
49
Q

What are 2 Factors that affect the Size of Fiscal Deficit

A
  • Amount of tax Avoidance
  • Political Priorities
50
Q

2 Ways to reduce Fiscal Deficit

A
  • Reduce Government Spending
  • Increase Taxes
51
Q

2 Ways to reduce Poverty and Inequality

A
  • Improve education for the Poorer
  • Make Tax system more progressive
52
Q

What are 3 factors that create problems when making new policies

A
  • Inaccurate Information
  • Risk and Uncertainty
  • Inability to control External Shocks
53
Q

2 Ways of Measuring International Competitiveness

A
  • Relative Unit Labour Cost
  • Relative Export Prices
54
Q

2 Factors that can improve a Country’s Terms of Trade

A
  • Increased Demands for Exports
  • SPICED

Economics (8 decks)

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