2.1 Government and the Economy: Unit 28 - 30 Flashcards

1
Q
  1. What is Balance of payments?
A
  • record of all transactions relating to international trade.
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2
Q
  1. What are the 2 parts of BOP?
A
  • current account
  • capital and financial account
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3
Q
  1. What is a current account? Capital and Financial account?
A

Current account- part of the balance of payments where all exports and imports are recorded.
Capital and Financial accounts are part of the balance where a flow of savings, investments, and currencies are recorded.

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4
Q
  1. What are exports? imports?
A

exports: goods and services sold overseas
imports: goods and services bought from overseas.

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5
Q
  1. What is the current balance? how to calculate.
A

difference between total exports and total imports
- total exports - total imports
- visible trade+ invisible trade

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6
Q
  1. What is current account deficit?
A

when the value of imports exceeds the value of exports.

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7
Q
  1. What is current account surplus?
A

when the value exports exceed the value of imports.

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8
Q
  1. What is a balance of trade/ visible balance? Invisible trade?
A
  • visible balance:- the difference between visible exports and visible imports.
  • Invisible trade:- involves the exchange of services.
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9
Q
  1. What is visible trade? Invisible trade?
A

i. trade in physical goods.
ii. involves in exchange in services.

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10
Q
  1. What is primary income?
A

money received from the loan of production factors abroad.

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11
Q
  1. What is secondary income?
A

government transfers to and from overseas agencies such as EU.

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12
Q
  1. What is exchange rate?
A

price of one currency in terms of another.

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13
Q
  1. How does exchange rates impact current account?
A
  • Demand for exports as a result of changes in the prices.
  • demand for the country’s goods, which influences demand for currency appreciating the value of the currency.
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14
Q
  1. What are the 5 reasons for deficit and surpluses?
A
  • Quality of domestic goods.
  • Quality of foreign goods.
  • Price of domestic goods.
  • Price of foreign goods.
  • Exchange rates between countries.
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15
Q
  1. What are the 4 impacts of a current account deficit?
A
  • leakages from the economy
  • inflation
  • low demand for exports.
  • funding the deficit.
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16
Q
  1. What are 5 business activities that damage the environment?
A
  • Mining
  • power generation
  • chemical processing
  • agriculture
    -construction
17
Q
  1. What are the 4 types of pollution businesses contribute to?
A
  • visual pollution
  • noise pollution
  • Air pollution
  • Water pollution
18
Q
  1. What are the 3 ways air pollution is occurred due to business activity?
A
  • burning of fossil fuels
  • emissions from factories and other business activities.
  • Agricultural activities.
19
Q
  1. What are the 3 main causes of water pollution?
A
  • industrial waste
  • Marine and ocean dumping
  • Sewage
20
Q
  1. What are the 6 measures government intervenes to protect the environment?
A
  • Taxation
  • Subsidies
  • Regulation
  • Fines
  • Pollution permits
  • Park provision
21
Q
  1. What is income inequality?
A
  • differences in income that exists between the different group of earners in society, that is the gap between the rich and the poor
22
Q
  1. What are the 2 types of poverty?
A
  • relative poverty
  • absolute poverty
23
Q
  1. What is absolute poverty?
A
  • where people do not have enough resources to meet all of their basic human needs.
24
Q
  1. What is relative poverty?
A

poverty that is defined relative to existing living standards for the average individual

25
Q
  1. What is Lorenz curve?
A
  • graphical representation of the degree of income or wealth inequality in a country
26
Q
  1. What are the 3 reasons to reduce poverty and inequality?
A
  • meet basic needs
  • raise living standards
  • ethical reasons
27
Q
  1. What are the 3 ways the government uses to intervene to reduce poverty and income inequality?
A
  • progressive taxation
  • redistribution through benefit payments
  • investment in education and health care.
28
Q
  1. What is progressive taxation? regressive taxation?
A
  • progressive taxation is where the proportion of income paid in tax rises as the income of the taxpayer rises.
  • regressive taxation is a tax system that places burden of the tax more heavily on the poor.