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Economics > 3.2.4-International Trade and the Global Economy > Flashcards

3.2.4-International Trade and the Global Economy Flashcards

1
Q

What are Commodities?

A

Raw materials e.g. iron, corn, crude oil

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2
Q

What is an Embargo?

A

Orders to stop trading with another country

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3
Q

What is Free Trade?

A

International trade left to its natural course without tariffs, quotas or other restrictions

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4
Q

What are infant industries?

A

New industries yet to establish themselves

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5
Q

What is interdependence?

A

The reliance of countries on each other resulting from specialisation and free trade

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6
Q

What is internal trade?

A

Trade within a country

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7
Q

What is international trade?

A

Where foreign companies sell their products on international markets

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8
Q

What is protectionism?

A

Government actions to protect domestic producers

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9
Q

What is Retaliate?

A

Actions countries take as a result of another countrie’s actions

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10
Q

What are Tariffs?

A

Taxes on imports

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11
Q

What are Trade Barriers?

A

Measures designed to restrict imports

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12
Q

What is Trade liberalisation?

A

Move towards freer trade by removing the barriers

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13
Q

What is a Trading Bloc?

A

Groups of countries situated in the same region that come together to enjoy free trade

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14
Q

What is the WTO?

A

International organisation set up in 1995 to promote and enforce better trade relations through-out the world

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15
Q

What is Appreciation?

A

When the value of the currency rises in value to another

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16
Q

What is Depreciation?

A

When the value of the currency falls in value to another

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17
Q

What are Exchange Rates?

A

The value of one currency for the purpose of conversion to another

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18
Q

What are Fixed Exchange rates?

A

When the value of a currency is pegged (fixed to) another major currency such as the US dollar

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19
Q

What is a Foreign Exchange Market?

A

A market where foreign currencies can be bought and sold, FOREX is the largest private company that offer this

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20
Q

What is Free Floating Exchange Rates?

A

Where the price of cirrency is determined by market forces (supply and demand)

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21
Q

What are Reserve Assets?

A

Currency, commodities, or other financial capital held by monetary authorities, such as central banks, to finance trade imbalances

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22
Q

What is the EU Single Market?

A

The EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services

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23
Q

What is Globalisation?

A

The worldwide movement toward economic, financial, trade and communications integration

24
Q

What is an LEDC?

A

Less Economically Developed Country

25
Q

What is an MEDC?

A

More Economically Developed Country

26
Q

What is a Multinational Corporation (MNC)

A

Having operations in 2 or more countries

27
Q

What is Over-Population?

A

When there are not enough resources to support the population without a decline in living standards

28
Q

What is Sustainability?

A

Development that meets the needs of the present without comprimising the ability of future generations to meet their own needs

29
Q

What is Tax Avoidance?

A

Practice of paying less tax in legal ways

30
Q

What is Tax Evasion?

A

Practice of paying less tax in illegal ways

31
Q

What are disadvantages of free trade?

A
  • Environmental damage
  • Unemployment (overreliance on imports)
  • Over specialisation
32
Q

What factors impact exchange rates?

A
  • Trade
  • Speculation
  • Economic growth
  • Interest rates
  • Political stability
33
Q

Why do we trade?

A
  • Cheaper goods
  • Cannot produce goods ourselves
  • Improving choice
  • Selling off unwanted commodities
34
Q

What is impacted by a strong pound?

A

Imports are cheaper and exports are more expensive

35
Q

What is the difference between a free trade area and economic union?

A

Economic union has a common tax system and employ the same currency

36
Q

What are disadvantages of international trade?

A
  • Overspecialisation
  • Unemployment
  • Environmental damage
  • Infant industries
  • Interdependence
37
Q

What are advantages of free trade?

A
  • More choice for consumers
  • Increase in living standards
  • GDP growth-world economic growth
  • Economies of scale
38
Q

What are pros and cons of the EU’s enlargement?

A

Pros:
* Increased potential for economies of scale
* Decreased production costs
* Low wages of new accession countries
Cons:
* MEDCs coping with influc of migrant workers
* New countries may require additional support from EU
* Lots of Bureaucracy in decision making

39
Q

What are the advantages of being in a trade bloc?

A
  • Cheaper goods from free trade
  • More consumer choice
  • Economies of scale for businesses
  • More FDI
  • Sharing of resources
40
Q

What are the disadvantages of being in a trade bloc?

A
  • Less global free trade
  • Financial costs for governments
  • Over reliance on trading within bloc
  • Firms merge-monopolize markets
41
Q

Who controls world trade?

A

The WTO

42
Q

What does the WTO do?

A
  • Trade negotiations
  • Building memberships
  • Settling disputes
  • Implementing and monitoring
43
Q

What are the criticisms of the WTO?

A
  • Allowing exploitation of workers in developing countries
  • Depleting of resources in LEDC’s
  • Uneven playing field-LEDC’s lower trade barriers when needed
  • Developed world pushing down the price of products from LEDC’s
  • Destroys the environment
44
Q

What are the reasons for protectionism?

A
  • Protect jobs
  • Protect small businesses
  • Protect the environment
  • Improve the current balance
  • Raising domestic demand-spending
45
Q

What are the problems with protectionism?

A
  • Lose benefits of free trade
  • Less competition
  • Trade wars
46
Q

What are ways to protect trade?

A
  • Tariffs
  • Quotas
  • Subsidies
  • Administrative barriers
47
Q

What is dumping?

A

Where a country over produces a commodity and the government / state subsidise it to reduce the price below what other countries can produce it for

48
Q

Why has globalisation happened?

A
  • Technology
  • Infrastructure
  • Deregulation
  • MNC’s
49
Q

How do countries encourage globalisation?

A
  • Open borders
  • Little protectionism
  • Easy planning permission
50
Q

How do governments encourage businesses to invest in their country?

A
  • Low interest
  • Government Grants
  • Relax laws
  • Investing more in education
  • Lower taxes
51
Q

What benefits does globalisation cause to the government?

A
  • Investment in infrastructure
  • Investment in education
  • More employment
  • Economic growth
52
Q

What benefits does globalisation cause to the business?

A
  • Access more markets
  • Access to resrouces/close to suppliers
  • Reduce cost of production
53
Q

What are examples of development aid?

A
  • Grants
  • Loans
  • Tied aid
54
Q

What are the advantages of globalisation for MEDC’s?

A
  • Higher profits for MNC
  • Higher Y and Employment
  • Lower prices
  • Increase in quantity of labour
  • Greater Consumer choice
  • Less conflict
55
Q

What are the advantages of globalisation for LEDC’s?

A
  • Increase in Y
  • Increase in tax revenue
  • Increase in exports
  • Increase in employment
  • Transfer of technology
  • Improvement in quality of human capital
  • Enterprise development

Economics (13 decks)

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