Chapter 13

Question 1

Globalisation

Answer 1

The breaking down of trade barriers to promote free movement of goods and services, labor and capital to form a global economy

Question 2

Causes of Globalisation

Answer 2

Transportation
Communication
Trade liberalisation
Multinational Enterprises
Foreign Direct Investment
International government markets
Trade aggreements

Question 3

Consequences of Globalisation: Positive

Answer 3

1 Economic growth Grow faster because they have access to international markets.
2 Employment opportunities The need to produce more goods creates demand for more labour.
3 Foreign direct investment (FDI) Establish businesses in other countries.
4 Balance of payments Improved because of more exports.
5 Poverty alleviation Reduce the levels of poverty because there are more jobs available.

Question 4

Consequences of Globalisation: Negative

Answer 4

Economic loss
Social costs
Health issues
Environmental deterioration
Indigenous knowledge systems
Increased interdependence
Unfair competition

Question 5

Absolute Advantage

Answer 5

Superior Production Capability Absolute advantage is when a country can produce a product/service more efficiently (at a lower cost or with higher productivity).

Question 6

Comparative Advantage

Answer 6

Lower Opportunity Cost Comparative advantage is when an economy can produce a particular good or service at a lower opportunity cost than its trading partners.