Theme 4

Question 1

Indictators of economic growth

Answer 1

Gross domestic product per capita

Finding and evaluating data on GDP

Literacy

Health - inc. life expectancy, pollution exposure and access to clean water

Human development Index

Question 2

Countries associated with the acronyms BRICS and MINT

Answer 2

BRICS - Brazil, Russia, India, China and South Africa

MINT - Mexico, Indonesia, Nigeria and turkey

Question 3

Purchasing power parity

Answer 3

A measure of real growth that sides the price or purchasing a standardised basket of goods and services in order to compare prices across economics

Question 4

Comparative advantage

Answer 4

The theory that a country should specialise in products and services that it can produce more efficiently that other countries

Question 5

Competitive advantage

Answer 5

The idea that a business should specialise in any area (products, services, management, research etc) where it can perform better than its competitors

Question 6

Foreign direct investment

Answer 6

Investing by setting up operations or buying assets in businesses in another country

Question 7

Horizontal FDI and Vertical FDI

Answer 7

Horizontal refers to producing the same products or services as done at home

Vertical FDI is where one firm is seeking to acquire materials or support for its own products or services.

Question 8

Different forms of FDI

Answer 8

Joint venture

Strategic alliances

Buying through cross-boarder mergers and acquisitions is the main way of that businesses undertake FDI

Question 9

Factors contributing to inc globalisation

Answer 9

Reduction of international trade barriers / trade liberalisation

Political change

Reduction cost of transport and communication

Increased significance of global companies - MNCs

Increased investment flows

Migration

Growth of global labour force

Structural change

Question 10

Globalisation

Answer 10

The growing integration of the worlds economies

Question 11

Types of protectionism

Answer 11

Tariffs

Import quotas

Subsidies

Question 12

Problems w trade barriers

Answer 12

A country may retaliate when barriers are imposed. - start trade war

Tariffs might also be ineffective if demand for imports is inelastic

Question 13

Administrative barriers

Answer 13

Rules and regulations (such as trading standards and strict specifications) that make it difficult for importers to penetrate an overseas market

Question 14

Common market

Answer 14

A market where foods, labour, and capita can move freely across the member states; tariffs are generally removed and non-tariff barriers eliminated, or at least reduced

Question 15

Customs union

Answer 15

A union where member states remove all trade barriers between themselves and members adopt a common set of barriers against non-members.

Question 16

Economic and monetary union

Answer 16

An economic union that uses common currency

Question 17

Single market

Answer 17

A market where almost all trade barriers between members have been removed and common laws or policies aim to make the movement of goods and services, labour and capital between countries as easy as the movement within each country

Question 18

Trading bloc

Answer 18

A group of countries that has signed a regional trade agreement or reduce or eliminate tariffs, quotas and other protectionist barriers between themselves

Question 19

Impacts for businesses of trading blocs - benefits

Answer 19

volume of trade increases within the region, producers being able to benefit from economics of scale

Trade increases, result in greater competition and thereby more efficiency in the market

Resources may be easier to source and labour easier to recruit, while production and transport costs may continue to fall

Question 20

Impacts on business of trading blocs - drawbacks

Answer 20

Overall may harm trade because countries outside the region may be better placed to specialise or develop a competitive advantage in the product and yet they are closed out of the market

Inefficient producers may be protected from competition, thereby diverting trade away from more efficient producers and potentially harming consumers

Question 21

Push factors that prompt trade

Answer 21

Saturated markets - most of its customers who would buy a product already have it, limited remaining sales

Competition - May drive down prices due to lowered costs, declining demand, due to change of tastes

Question 22

Pull factors that prompt trade

Answer 22

Economies of scale - lower cost per unit

Risk spreading - expanding into other countries and markets, firm may be able to limit the various risks that it faces, over dependance may leave a market vulnerable in the short term, long term a region characterised by a rapid aging population may not be a viable place for a business that sells mainly to under 30s

Question 23

Off-shoring

Answer 23

Shifting jobs to other countries

Question 24

Outsourcing

Answer 24

Shifting jobs to other organisations