2.2 THE GLOBAL ECONOMY

Question 1

globalisation

Answer 1

growing interconnection of world’s economies

Question 2

interdependence

Answer 2

where actions of one country or large firm will have a direct effect on others

Question 3

multinational corporations (MNCs)

Answer 3

operate in many different countries

Question 4

saturated

Answer 4

market in which there is more of a product for sale than people want to buy

Question 4

offshoring

Answer 4

getting work done in another country in order to save money

Question 5

FDI

Answer 5

Foreign direct investment (FDI) is any investment that a firm makes into a
foreign country.

Question 6

reserves

Answer 6

amount of something valuable such as oil gas or metal ore

Question 7

MNCs

Answer 7

Multinational companies (MNCs) are firms that operate in more than one
country.

Question 8

tax avoidance

Answer 8

practice of trying to pay less tax in legal ways

Question 8

repatriation (of profit)

Answer 8

where a multinational returns the profits from an oversees venture to the country where it is based (typically from developing country to developed country)

Question 9

free trade

Answer 9

situation in which goods coming into or going out of a country are not controlled or taxed

Question 10

protectionsism

Answer 10

approach by governments to protect domestic producers

Question 11

trade barriers

Answer 11

measures designed to restrict imports

Question 12

dumping

Answer 12

where an oversees firm sells large quantities of a product below cost in the domestic market

Question 13

infant industries

Answer 13

new industries yet to establish themselves

Question 14

tariffs or customs duties

Answer 14

tax on imports to make them more expensive

Question 15

embargo

Answer 15

official order to stop trade with another counry

Question 16

quota

Answer 16

physical limit on quantity of imports allowed into a counrty

Question 17

bi-lateral trade agreements

Answer 17

trade deal between only two countries

Question 18

trading blocs

Answer 18

groups of countries situated in same region that join together and enjoy trade free of tariffs, quotas and other forms of trade barrier

Question 19

trade liberalisation

Answer 19

move towards grater free trade through removal of trade barriers

Question 19

WTO (world trade organisation)

Answer 19

international organisation that promotes free trade by persuading countries to abolish tariffs and other barriers, It polices free trade agreements, settles trade disputes between governments and organises trade negotiations

Question 20

commodities

Answer 20

product that can be sold to make a profit, especially one In its basic form before it has been used or changed in an industrial process.
Examples - farm products and metals

Question 21

exchange rate

Answer 21

price of one currency in terms of another

Question 22

foreign exchange market

Answer 22

market where foreign currencies can be bought and sold

Question 23

revalued (of a currency)

Answer 23

when a government fixes a new higher exchange rate

Question 23

appreciate (currency)

Answer 23

where the value of a currency rises owing to market forces - exchange rate increases as a result

Question 24

depreciate (of a currency)

Answer 24

where value of a currency falls owing to market forces - exchange rate falls as a result

Question 25

depreciate (currency)

Answer 25

where the value of a currency falls owing to market forces - exchange rate falls as a result

Question 26

devalued (currency)

Answer 26

when a government fixes a new lower exchange rate