4.1

Question 1

what is gross domestic product

Answer 1

total value of goods produced and services provided in a country within a given period of time

Question 2

UK growth tends to be lower than emerging economies

Answer 2

• growth of the manufacturing sector
• businesses choose to manufacture in emerging economies due to lower labour costs and access to raw materials

Question 3

what is globalisation

Answer 3

economic integration of different countries through increasing freedoms in the cross-border movement of people, goods, technology & finance

Question 4

Emerging economic powers of countries within Asia, Africa and other parts of the world include

Answer 4

BRICS: Brazil, Russia, India, China and South Africa

MINT: Mexico, Indonesia, Nigeria and Turkey

Question 5

the implications of economic growth
Impacts on Businesses

Answer 5

• Reduced costs as firms benefit from lower labour costs and cheaper raw materials
• Increased trade opportunities as demand for goods and services increases

Question 6

the implications of economic growth
Impacts on Individuals

Answer 6

• Reduced unemployment as there is more demand, which requires more labour to increase output
• Increased average incomes as individuals due to employment, which increases the standard of living
• Access to quality public services as tax revenue is generated. The government improves public services

Question 7

There are four key indicators used to assess the economic growth of emerging economies

Answer 7

• literacy
• health
• GDP per capita
• Human Development index - HDI

Question 8

What is GDP per capita

Answer 8

is calculated by taking the total output (GDP) of a country and dividing it by the number of people in that country

Question 9

what is protectionism

Answer 9

any method that restricts free trade

Question 10

tariff definition

Answer 10

a tax placed on an import to increase its price and decrease in demand. this shifts demand for that product from foreign businesses to domestic businesses

Question 11

quota definition

Answer 11

physical limit on the quantity of a good imported or exported

Question 12

The benefits of tariffs include

Answer 12

• protect infant industries so they can eventually become more competitive globally
• increase in government tax revenue
• domestic goods will be cheaper
• ensures better job security

Question 13

The disadvantages of tariffs include

Answer 13

• high import prices won’t put people off
• unfair competition
• Tariffs may increase prices for consumers

Question 14

the effect of quota

Answer 14

Restricting the physical amount of imports means that domestic businesses face less competition and benefit from a higher market share

Question 15

The benefits of import quotas include

Answer 15

• To meet extra demand, domestic businesses may hire more workers which reduces unemployment and benefits the wider economy
• higher prices for the product may encourage new businesses to start up in the industry
• Countries can easily change import quota as market conditions change
• their exporters can still sell their goods at a higher price in domestic markets (but a limited amount)

Question 16

The disadvantages of import quotas include

Answer 16

• Quotas limit the supply of a product and whenever supply is limited, the price of the product rises
• this generates tension in the relationship with trading partners
• reduces the level of competition

Question 17

what is a subsidy

Answer 17

is an amount of money given by the government to protect particular industries. they lower prices making the price more competitive

Question 18

what is a Trading bloc?

Answer 18

a group of countries that has signed an agreement to reduce/eliminate tariffs, quotas and other protectionist measures within themselves.

Question 19

Different types of trading blocs

Answer 19

• Preferential trade arrangements (PTA)
• Free trade areas (FTA)
• Customs unions (CU)
• Common markets
• Economic unions

Question 20

Preferential trade arrangements

Answer 20

provide lower barriers on some trade among participating nations than on trade with non-member nations. It is the loosest form of economic integration.

Question 21

A free trade area

Answer 21

is the form of economic integration where all barriers are removed on trade among members, but each retains its barriers to trade with nonmembers

Question 22

A Customs Union

Answer 22

allows no tariffs or other barriers on trade among members, and it harmonizes trade policies (e.g. setting of common tariff rates) toward the rest of the world

Question 23

A Common Market

Answer 23

goes beyond a customs union by allowing the free movement of labour and capital among member nations. The EU achieved the status of a common market at the beginning of 1993.

Question 24

Economic Union

Answer 24

a trade agreement between countries that aims to increase economic integration. It allows for the free movement of goods, services, capital, and labor across borders.

Question 25

Benefits of trade blocs

Answer 25

• Foreign Direct Investment
• Economies of Scale
• Competition: bring businesses in numerous countries closer together, resulting in greater competition
• Greater trade: trading blocs reduce protectionist measures e.g. tariffs and quotas, which stimulate greater demand
• Market efficiency