2.2 The Global Economy Unit 35 - 39 Flashcards
1
Q
- What is globalization?
A
it is the growing interconnection of the world’s economies.
2
Q
- What is interdependence?
A
- where the actions of one country or large firm will have a direct effect on others.
3
Q
- What are the 5 features of globalization?
A
- goods and services are traded freely across international borders.
- free to live and work in any country they choose.
- high level of interdependence between nations.
- capital can flow between different countries.
- the free exchange of technology and intellectual property.
4
Q
- What are the four reasons for globalization?
A
- fewer tariffs and quotas
- reduced cost of transport
- reduced cost of communication
- increased significance of multinationals
5
Q
- What is a saturated market?
A
market in which there is more of a product for sale than people want to buy.
6
Q
- Who are the 6 things affected by globalisation?
A
- individual countries
- governments
- producers
- consumers
- workers
- the environment
7
Q
- What are the 6 advantages to individual countries of globalization?
A
- high GDP
- growth
- contribute and increase wealth in the country
- more output
- high employment
8
Q
- What is the disadvantages to an individual country of globalization?
A
- due to interdependence economy can be affected badly.
9
Q
- What are the 4 advantages to a producer of globalization?
A
- access to huge markets.
- lower costs.
- access to labor.
- reduced taxation.
10
Q
- What are the 5 advantages of consumers of globalization?
A
- cheaper goods
- wider choice
- latest technology
- quality of goods
- improved living standards.
11
Q
- What are the 3 advantages to workers of globalization?
1 disadvantage to workers?
A
Ad:- more job opportunities
- learn new skills
- can get paid more
Dis: offshoring:- practice of getting work done in another country in order to save money.
12
Q
- What is a disadvantage of globalization to the environment?
A
unsustainable economic growth:- economic that is not possible to sustain without causing environmental problems.
13
Q
- What is the 2 advantage of globalization to the government?
A
- increase in tax revenue
- encouragement of starting up new business.
14
Q
- What are multinational corporations?
A
- companies that operate in many different countries.
15
Q
- What are the 6 features of MNCs?
A
- Huge assets
- highly qualified and experienced professional executives and managers.
- powerful advertising and marketing capability.
- highly advanced and up-to-date technology.
- highly influential both economically and politically.
- very efficient since they can exploit huge economies of scale.
16
Q
- What is Foreign Direct Investment? (FDI)
A
FDI, or inward investment, occurs when a company makes an investment in a foreign country.
17
Q
- What are the 4 reasons for the emergence of MNCs/ FDI?
A
- economies of scale
- access to natural resources/ cheap materials.
- Lower transport and communication costs.
- Access to customers in different regions.
18
Q
- What are the four ways governments actively seek FDI?
A
- offering tax breaks, subsidies, grants, and low-interest loans
- lifting restrictions and relaxing regulations to make investing easier for foreign firms
- investing in their own infrastructure.
- investing in education so that people can get jobs in foreign countries.
19
Q
20, What are the 5 advantages to governments of MNCs and FDI?
A
- Job creation
- investment in infrastructure.
- developing skills.
- developing capital
- ## contributing to taxess
20
Q
- What is tax avoidance?
A
- practice of trying to pay less tax in legal ways.
21
Q
- What is repatriation?
A
- where a multinational returns the profits from an overseas venture to the country where it is based, typically from a developing country to a developed country
22
Q
- What are reserves?
A
- are the amount of something valuable, such as oil, gas…
23
Q
- What are the 3 disadvantages of governments of MNCs/ FDIs?
A
- Tax avoidance
- environmental damage
- moving profits abroad.
24
Q
- What is international trade?
A
international trade is trade between nations.
25
Q
- What are the 3 reasons for international trade?
A
- obtaining goods that cannot be produced domestically.
- obtaining goods that can be bought more cheaply from overseas.
- selling off unwanted commodities.
26
Q
- What is free trade?
A
- situation in which the goods coming into or going out of a country are not controlled or taxed.
27
Q
- What are the 3 advantages of free trade?
A
- lower prices and increased choice for consumers.
- lower input prices.
- wide markets for businesses.
28
Q
- What are 2 disadvantages of free trade?
A
- competition for domestic businesses.
- unemployment in domestic firms.
29
Q
- What is protectionism?
A
- approach used by governments to protect domestic producers
30
Q
- What is dumping?
A
- where an overseas firm sells large quantities of a product below cost in the domestic market.
31
Q
- What are trade barriers?
A
- measures designed to restrict imports.
32
Q
- What are the 7 reasons for protectionism?
A
- prevent dumping
- protecting employment
- protecting infant industries
- to gain tariff revenue
- preventing the entry of harmful or unwanted goods.
- reduce current deficits.
- retaliation
33
Q
- What are infant industries?
A
new industries yet to establish themselves.
34
Q
- What are the 3 methods of protectionism?
A
- tariffs
- quotas
- subsidies
35
Q
- What are tariffs/ custom duties?
A
- a tax on imports to make them more expensive.
36
Q
- What is embargo?
A
official order to stop trade with another country(it is an extreme form of a quota)
37
Q
- What is quota?
A
- physical limit on the quantity of imports allowed into a country.
38
Q
- What is bi-lateral trade agreement?
A
trade deal between only 2 countries.
39
Q
- What impact do tariffs and quotas have on a. Import quantity? b. Price of imports. c. demand on imports?
A
-a. reduces import quantity
-b. increase the price of imports
-c. reduction in demand for imports.
40
Q
- What impact do subsidies have on producers?
A
it helps them to produce more, or they are forced to reduce prices.
41
Q
- What is a trading bloc?
A
- groups of countries situated in the same region that join together and enjoy trade free of trade barriers.
42
Q
- What are the 5 types of trading bloc?
define
A
- Preferential Trading Areas(PTAS) :- this type of arrangement means that members agree to remove trade barriers on a range of goods and services.
- Free Trade Areas:- trade between members of an FTA is completely free of trade barriers.
- Custom unions:- A customs union is a type of trade bloc that is composed of a free trade area with a common external trade barrier.
- Common markets:- a group of countries imposing few or no duties on trade with one another and a common tariff on trade with other countries, also allowing free movement of labor and capital.
- Economic unions:- An economic union is a free movement of goods, services, money, and workers between nations, facilitated by coordinating social and financial policies.
43
Q
- What are the advantages of trading blocs on member states?(6)
A
– goods will be cheaper
-consumer choice
- faster economic growth
- exploit economies of scale
- extra competition improves the quality of goods and encourages innovation.
- reduces border conflict.
44
Q
- What are the 5 disadvantages of trading blocs on member states?
A
- financial cost to the government.
- exploit consumers in the bloc.
- rely too heavily on trade within the bloc.
- also miss out on opportunities in other world markets
- inefficient producers may be protected from businesses outside the trade bloc then consumers might end up paying more for goods and services.
- unequal resources leading to political tension.
45
Q
- What is a disadvantage of trading bloc on a non-member states?
A
- will face common trade barriers and may be forced to find new markets.
46
Q
- What are the 3 examples of trading blocs?
A
- NAFTA(north American Free Trade Agreement) :- the USA, Canada and Mexico.
- ASEAN(association of southeast Asian nations) :- Thailand, Vietnam, Malaysia, Indonesia, the Philippines, and Singapore.
- SACU( South African Customs Unions):-(bostswana, Lesotho, nambia
