4.1.2 - International Trade And Business Growth

Question 1

Def international trade

Answer 1

Exchange if products that takes place between the economic agents of a country such as a business, governments of consumers

Question 2

Def imports

Answer 2

Are products and services produced abroad and consumed domestically

Question 3

Def exports

Answer 3

Are products and services that are produced domestically and consumed overseas

Question 4

Cash flow of Imports

Answer 4

Goods and services arrive in UK meaning cash flows out of the UK

Question 5

Cash flow of exports

Answer 5

Goods and services go out of the UK meaning cash flows into the UK

Question 6

How much does Britain import a year

Answer 6

£40 billion a year: such as foreign brands, cheap materials and services such as tourism

Question 7

How does exporting benefit businesses

Answer 7

Increasing sales overseas meaning businesses can gain economies of scale and avoid reliance on domestic markets

Question 8

4 Benefits of international trade

Answer 8

• export revenues and jobs help reduce poverty
• low prices for consumer markets are more competitive
• technology is spread, raising productivity
• economies of scale - causing lower unit costs

Question 9

4 Drawbacks of international trade

Answer 9

• transport costs and emissions
• rasht inequality due to uneven gains from trade
• pressure on wages and working conditions
• risks from global/ external shocks

Question 10

Def of business specialisation

Answer 10

Focusing on producing one product or a limited scope of products to become more efficient

Question 11

Def foreign direct investment

Answer 11

Occurs when a business purchases non-current assets in another country

Question 12

Def inward FDI

Answer 12

When foreign capital is invested into local resources

Question 13

3 impacts of specialisation

Answer 13

• can boost efficiency
• lower selling prices
• economic output increased globally

Question 14

How can specialisation boost efficiency

Answer 14

Producing one product means fewer machines will be used, associated lower costs, no need to train multi-skilled staff

Question 15

What does Taylor suggest

Answer 15

‘Employees who repeat one simple task gets quicker, boosting efficiency’

Question 16

Benefits of engaging with FDI

Answer 16

• take advantage of lower labour costs in other countries
• operate closer to source of raw materials and other supplies rather than transport long distances
• helps avoid protectionist measures
• brings in high paying, new jobs

Question 17

Weakness of FDI

Answer 17

• large companies can exploit developing countries working conditions
• developing countries tempted to compete by reducing environmental regulation to attract FDI
• more competition within domestic market from foreign firms
• profits may be taken back to home countries

Question 18

4 strategies to attract FDI

Answer 18

• attractive rates of corporation tax
• tax reliefs/ other subsidies, trade and investment agreements
• flexible labour markets and up-skilling of working
• attraction of relatively low unit labour costs