4.1.1

Question 1

What is Globalisation?

Answer 1

The integration of the world markets into a single international market.

Question 2

What is an economy of scale?

Answer 2

A cost advantage to a company that produces in larger quantities ( Reduction in AC as output increases)

Question 3

What is protectionism?

Answer 3

A government policy that restricts international trade to help domestic industries.

Question 4

What is a Multinational company / Transnational corporation?

Answer 4

A company that has significant product operations in at least 2 countries.

Question 5

What is transfer pricing?

Answer 5

An accounting technique in which firms sell goods to other divisions of their firm to reduce tax burden.

They sell at a high price to firms in high tax countries in order to reduce tax and low price in low tax countries to increase profits.

Question 6

What are the causes of globalisation?

Answer 6

.Trade in goods / services
. Trade liberalization
. Multinationals / transnational companies
. Foreign ownership of firms
. Communications and I.T

Question 7

What are the impacts of globalisation on consumers?

Answer 7

. Increased consumer choice
. Decreased prices
. Incomes and standard of living increase
. Connection to the rest of the world. But global diversity is threatened
. Growing inequality

Question 8

What are the impacts of globalisation on workers?

Answer 8

. Increased migration (away from rural areas)
. Fall in wages due to international competition. But increase in AD so more jobs
. Could lead to falls or rises in employment (e.g fall in manufacturing in UK but rise in china)
. Poor working conditions (e.g sweatshops)
. Wages increasing for skilled workers (Greater inequality)

Question 9

What are the impacts of globalisation on producers?

Answer 9

. Access to wider markets
. Access to lower costs ( raw materials and labour)
.Increased economies of scale ( more profit and investment)
. Multinational firms have the ability to move production between countries (footloose capitalism)
. Increased infrastructure
. Tax avoidance methods

Question 10

what are the impacts of globalisation on governments?

Answer 10

. Foreign investment. But manufacturers lose demand when firms move
. Fall in tax revenue when firms move overseas
. Growing inequality and increased poverty
. Increased structural unemployment ,etc
. Trade imbalances

Question 11

What are the impacts of globalisation on the environment?

Answer 11

. Lack of sustainability
. Increase in pollution and waste from foreign investment
. Degrading natural resources