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Economic topic by topic theme 2-3 > 2.4 Life in a Global Economy > Flashcards

2.4 Life in a Global Economy Flashcards

1
Q

Define Globalisation

A

The growing interconnectivity of different countries stemming from an improvement in communication and trade

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2
Q

Define FDI

A

Big businesses investing in new markets

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3
Q

What 2 things does FDI do for an economy?

A
  • Creates jobs

- Enhances prosperity

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4
Q

How do some governments encourage investment into their country?

A

Offer incentives for investors like reduced tax

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5
Q

Define ‘World Trade and GDP’

A

Measure of output and income

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6
Q

How has World Trade changed with globalisation?

A

It has become easier and therefore more common

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7
Q

How has globalisation affected the GDP of smaller countries?

A

Increased

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8
Q

How has globalisation led to increased migration?

A

International trade enhances competition so social structures change as more skilled workers are required

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9
Q

Give the 5 factors that have led to globalisation in the last 50 years?

A
  • Trade Liberalisation
  • Capital Market Liberalisation
  • Political change in the USSR and China
  • Reduced cost of travel and transport
  • Increased significance of global transnational companies
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10
Q

Explain what Trade Liberalisation is

A

Trade becoming easier and more common

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11
Q

How has Trade Liberalisation led to globalisation?

A

Makes markets more competitive and increases exports

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12
Q

What is Capital Market Liberalisation?

A

Moving large sums of money from one economy to another

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13
Q

How has Capital Market Liberalisation led to globalisation?

A

More free trade has fostered economic growth

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14
Q

How can Capital Market Liberalisation be bad for the global economy?

A

A disaster in one country is going to have a big effect in other countries

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15
Q

When did the USSR collapse?

A

1989

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16
Q

Why has the cost of travel and transport fallen?

A

Advancements in technology have made it easier and cheaper

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17
Q

How is globalisation important in dynamic markets?

A

It allows businesses to quickly make decisions and communicate quickly

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18
Q

Define containerisation

A

The advancement of technology of using container ships

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19
Q

How has the increase of transnational companies led to globalisation?

A

Retailers have been able to shop around for cheaper products in wider markets

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20
Q

What is the fact that can be used in explaining the increase of transnational companies?

A

Some firms have GDP higher than entire countries

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21
Q

Define what is meant by a ‘Developed Country’

A

A country that has industrialised long ago and has very high living standards

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22
Q

Give 3 characteristics of a ‘Developed Country’

Primary, Tertiary, Skilled workers

A
  • Small Primary Sector
  • Large Tertiary Sector
  • Highly skilled and educated population
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23
Q

Give 5 characteristics of a ‘Developing Country’

Primary, Secondary, Skilled workers, Welfare Sector, Labour

A
  • Large Primary Sector
  • Small Secondary Sector
  • Unskilled Workforce
  • Small Welfare Sector
  • Labour intensive
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24
Q

Give 4 characteristics of an ‘Emerging Economy’

Economic Growth, Living Standards, Expansion, Migration

A
  • Very high economic growth
  • Rapidly rising living standards
  • Expansion fastest in manufacturing
  • Huge rural to urban migration
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25
Give the 5 main indicators of economic growth
- HDI (Human Development Index) - GDP per Capita - Literacy Rate - Health - Mean/Median incomes
26
Give 1 reason that someone would measure economic growth with GDP per capita
Gives an average income that's easily comparable with other countries
27
Give 2 reasons why it could be bad to measure economic growth with GDP per capita
- Exchange rates skew the data | - Won't account for the hidden economy
28
Give 1 reason that someone would measure economic growth with the Literacy Rate
Shows the government's investment into education
29
Give 2 reasons why it could be bad to measure economic growth with the Literacy Rate
- Can be difficult to measure | - Doesn't only show economic growth
30
Give 2 reasons that someone would measure economic growth with Health
- Shows government investment into healthcare | - Can be reflective of wages (healthcare isn't free)
31
Give 2 reasons why it could be bad to measure economic growth with Health
- Can be misleading | - Doesn't only show economic growth on its own
32
What is the HDI?
A composition of Gross National Income with life expectancy and schooling years
33
What range of numerical values can the HDI take?
0-1 scale
34
Give 2 reasons that someone would measure economic growth with the HDI
- Easily collectable data | - More representative than a factor on its own
35
Give 2 reasons why it could be bad to measure economic growth with the HDI
- Doesn't show spread | - Doesn't show unemployment
36
Give 1 reason that someone would measure economic growth with Mean/Median incomes
Can provide some additional information about income distribution and living standards
37
Give 1 reason why it could be bad to measure economic growth with Mean/Median incomes
Can't tell the effects of inequality
38
Define specialisation
When an individual, firm or country concentrates on the production of a limited range of goods
39
Give an advantage of specialisation for a business
- Gain a competitive advantage through pricing
40
Give 2 advantages of specialisation on an economy
- Jobs created | - Exports increase which increases AD
41
Give a disadvantage of specialisation
Risk isn't spread
42
Define Comparative advantage
A natural ability to produce a good for a lower cost than competitors (e.g. tropical countries with tropical fruits)
43
Define Absolute advantage
An ability for a country/firm to produce a product using less resources than another
44
Define Trading Bloc
The umbrella term for groups of countries that come together to conduct free trade
45
Give the 3 types of Trading Bloc
- Free Trade Area - Common Market - Single Market
46
Define Free Trade Area
Groups of countries that trade freely with few or no trade barriers
47
Give the 2 features of a Common Market
Free international Trade | Free Movement of Goods and People
48
What is meant by a single market?
Member countries agreeing to harmonise their regulations so all businesses are on a level playing field
49
Give 2 advantages for a business of being in a Trading Bloc
- Encourages Efficiency as competition increases | - No retaliation through tariffs or anything
50
Give an advantage for the economy of being in a Trading Bloc
Exports increase which boosts AD
51
Give a disadvantage for the economy of being in a Trading Bloc
Imports alos increase which reduces AD through the BOP
52
Give 2 disadvantages for a business of being in a Trading Bloc
- Limits them to trade with only member countries | - Consumer choice is expanded so demand may fall as cheaper alternatives are discovered
53
Define visible import
Tangible goods that have to be driven through the channel tunnel or air-freighted
54
Define Invisible import
Services (e.g. tourism, finance)
55
Give an advantage of being in a common market for a business in terms of competitive advantage
Can find workers from abroad with the same skill set who will work for less
56
Define depreciation
When the market value of a currency falls against another
57
Define appreciation
When the market value of a currency rises against another
58
Draw the graph for appreciation
see poster
59
Draw the graph for depreciation
see poster
60
What is the effective exchange rate?
A weighted index of exchange rates which rolls all foreign currencies together in proportion to their relative importance in the economic trade pattern
61
What does a rising figure in the effective exchange rate mean?
They are less likely to be competitive
62
What does a falling figure in the effective exchange rate mean?
Depreciation
63
What is the result of depreciation on the BOP?
- more exports | - less imports

Economic topic by topic theme 2-3 (6 decks)

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