2.4 Globalisation

Question 1

Why were interest rates decreased from 2009 until now

Answer 1

. To improve economic climate
. To encourage people to spend money therefore increasing sales especially on luxury and non essential goods
. So production of goods and services increase
. Potential rise in employment

Question 2

Benefit of globalisation -rapid growth

Answer 2

. Higher profits
. Better shareholder returns
. Provides opportunities
. Economies of scale

Question 3

Benefit of globalisation - inward investment

Answer 3

. Uk received £25,500m from foreign governments
. Finances expansion of some industries (e.g Motor car manufacturing)
. Helps finance infrastructure improvements
. Uk businesses bought by foreign companies therefore better investment into training the workforce

Question 4

Benefit of globalisation - cheaper resources

Answer 4

. E.g uk’s coal is imported as it is much cheaper then homegrown coal
. Helps increase business’s profits
. Make businesses more price competitive
. HSBC use foreign workers as wage rates are lower

Question 5

Drawbacks of globalisation - new and fierce competition

Answer 5

. Place businesses under pressure selling low
. Price drops makes it hard competing
. Thousands of lost jobs e.g uk steel industry

Question 6

Drawbacks of globalisation - threat of takeover

Answer 6

. Cadbury bought by MNC “US Multinational Kraft”
. Led to Cadbury factory closed in Bristol
. Loss of jobs
. Supplier lost sales

Question 7

What are exchange rates

Answer 7

. The price of one currency expressed in terms of another currency e.g £1 = €1.15

Question 8

SPICED

Answer 8

Strong
Pound makes
Imports
Cheaper
Exports 
Dearer

Question 9

Affect on uk imports and exports if £ rises (appreciates)

Answer 9

. Imports become cheaper so more will be imported

. Exports become more expensive so less will exported

Question 10

Affect on uk imports and exports if £ falls (depreciates)

Answer 10

. Imports become more expensive so less will be imported

. Exports become cheaper so more will be exported