4.1 international economics Flashcards

1
Q

antonym of of globalisation

A

protectionism

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2
Q

globalisation definition

A

greater integration & interconnectedness between countries

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3
Q

tech factor of increased globalisation

A

drop in transport costs, death of distance

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4
Q

MNCs

A

has business operations in two or more countries. These companies are often managed from and have a central office headquartered in their home country

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5
Q

opportunities MNCs provide for the community

A

infrastructure (transport as well as training workers)

diversification of industries

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6
Q

negative of MNCs

A

impact on small firms
environmental impact
exploitation
taxation

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7
Q

free trade definition

A

no restrictions on the flow of goods and services between countries

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8
Q

absolute advantage

A

when country a can produce a good or service using fewer resources than that of another country

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9
Q

comparative advantage

A

an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners

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10
Q

SPICED

A

strong pound imports cheaper exports dearer

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11
Q

factors that influence patterns of trade CETE

A

comparative advantage
emerging economies
trading blocs
exchange rates

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12
Q

factors that influence patterns of trade: comparative advantage

A

cheap production/lower inflation pressure/general unemployment

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13
Q

factors that influence patterns of trade: emerging economies

A

integration in competitive markets & increased wealth for citizens
creation of jobs & reduction of poverty

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14
Q

factors that influence patterns of trade: growth in trading blocs

A

removes barriers to trade

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15
Q

factors that influence patterns of trade: exchange rates

A

appreciation in the exchange rate will lead to a fall in exports as the price as the price of UK goods and services abroad will go up

dependant on the elasticity of the product

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16
Q

formula for terms of trade

A

index of export prices / index of import prices

e/i

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17
Q

free trade areas

A

where members either reduce or elimate trade barriers. trade liberalisation

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18
Q

customs unions

A

members agree to remove trade barriers amongst themselves & agree on a common approach to trade barriers where other countries are involved. they act as a homogenous group

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19
Q

common markets

A

removal of trade barriers & freedom of labour & movement within the bloc.
usually also agreements of common economics policies & capital

20
Q

monetary unions

A

independant countries that share a single currency

21
Q

requirements to join the eurozone

A

fit in the convergence criteria eg. stable inflation, govt deficiet, exchange rates doesn’t change, interest rates

22
Q

types of restrictions on free trade

A

tariffs quotes subsidies embargos

23
Q

types of non tariff barriers to free trade

A

complex legal forms, inspections

24
Q

reasons for protectionism to protect lay people

A

protect domestic jobs
externalities (like illegal goods entering the country)
prevent dumping
country nationalism

25
Q

govt reasons for protectionism

A

protect infant industries
revenue from tariffs
balance of payments
country nationalism

26
Q

graph for tariffs highlights

A

increase in consumer surplus outside triangle
lost govt revenue in teh middle
net welfare gain on each side

27
Q

FDI

A

foreign direct investment. the establishment of operations in other countries. long term capital investment flow. more active

28
Q

portfolio investment

A

the purchase of financial assets in another country eg. bonds or securities

29
Q

primary income

A

net income flow made up of investment income from profits, interest + dividents between countries

30
Q

secondary income

A

current transfers of income arising from gifts brtween residents, donations + overseas aid + transfers between the uk and the eu

31
Q

components of the balance of payments

A

current
financial
capital
net errors + ommissions

32
Q

reasons for current acc deficit

A

high propensity to import
weak product + price competitiveness
high exchange rates
weak productivity

33
Q

reasons for current acc surplus

A

low propensity to import
strong product + price competitiveness
low exchange rates
strong productivity

34
Q

devaluation

A

reduction of the value of a currency against other by reducing interest rates or selling reserves

will boost price competitiveness + reduce demand for imports

35
Q

deflationsionary poliices

A

reducing inflationary pressure on the economy

improves price competitiveness of exports
thus reducing demand for imports

36
Q

direct controls as a response to current acc imbalance

A

seeking control of expenditure on imports. think bans quotas tarriffs

37
Q

policies to reduce expenditure might work like

A

raising taxes to reduce disposable cinome + demand

encourage consumers to switch their demand to domestic goods eg. think buy british campaigns

38
Q

worker focused way to balance current acc

A

increase producitivity

like investment in human capital , subsidies on tech

39
Q

what does a global trade imbalance tell us

A

lack of competitiveness + general suffering

40
Q

possible response to world trade imbalance

A

move to protectionism? protecting oneself
WTO rules to prevent move to protectionsim

offset by other accounts
depreciation of currency

41
Q

marshall lerner condition

A

states the current account will only improve if the sum of elasticities of imports + exports is >1

if demand is highly inelastic, thus will not be sensitive to price and therefore deficit may worsen before it improves. think smiley face

42
Q

three systems of exchange rates

A

fixed floating mixed

43
Q

different between appreciation and revaluation

A

appreciation under floating

revaluation under fixed

44
Q

difference betweeen depreciation and devaluation

A

depreciation under floating

devaluation under fiixed

45
Q

3 bad boy factors influencing terms of trade

A

exchange rates
inflation rates
price elasticity

46
Q

impact of change in terms of trade

A

idrk could go either way. think it through

47
Q

big 4 factors impacting the growth of globalisation

A

trade agreements
improved tech
reduced tariffs & protectionism
global trading blocs