Consolidation questions Flashcards
patterns of trade refer to…..
trends in what countries export and import, how much and to whom
A trade weighted index is….
A trade weighted index is a way to compare the value of a currency to the average value of a group of its trading partners
Inflation affects exchange rate by…
Inflation affects exchange rate by reducing international competitiveness and reducing demand for currency, and may also increase interest rate by central bank pushing up exchange rate via foreign savers demanding currency
Growth is measured by…
Growth is measured by percentage change in gdp
An output gap is difficult to measure because…
An output gap is difficult to measure because hard to measure potential output and even actual output constantly revised after new figures come in. Some service sectors’ output hard to measure
Hysteresis is…
Hysteresis is the loss of skills in labour market from long term unemployment
Static and dynamic gains from trade are…
Static gains are increasing productive and allocative efficiency via specialisation reducing costs and prices and dynamic gains from trade are long term gains over time such as innovation
Barriers to exit include…
Barriers to exit include losses from business assets that not sold at value and cost of laying off workers
One fact about a patent is…
One fact about a patent is that it lasts for 20 years and is a legal right of ownership
Two industries that could still be privatised include…
Rail Services: The UK railway system has already seen privatization, but the national rail infrastructure (Network Rail) remains in public hands. There could be opportunities to further involve the private sector in the ownership and operation of this infrastructure.
NHS Services: While the NHS remains publicly funded and managed, privatization of some services (such as healthcare delivery, non-emergency services, and certain administrative functions) could be expanded. The trend toward outsourcing parts of NHS services (such as cleaning, catering, and back-office functions) has been ongoing for some time.
Education: While schools and universities are mostly public, there is a growing trend of private companies operating academies and free schools. Further privatization could involve expanding private sector participation in education, particularly in the primary and secondary sectors.
Water and Waste Management: Most of the UK’s water utilities are privately owned, but water management infrastructure like sewage treatment, flood defenses, and waste collection services may still be areas where privatization could be explored or expanded.
Social Housing : The sale or transfer of publicly owned social housing to private companies, local authorities, or housing associations has been a point of debate for years. Further privatization could involve expanding this model to provide more housing options under private management.
Public Broadcasting: The BBC, the UK’s national broadcaster, is funded by a license fee and operates publicly, but some have called for its privatization or reform. There could be debates over privatizing its operations or restructuring the funding model.
Postal Services: The Royal Mail was privatized in 2013, but the postal network itself remains a heavily regulated market. There may be scope for further deregulation or increasing private competition in postal services.
Transport Infrastructure: Beyond the rail network, other transportation sectors, such as airports, roads, and port services, could see more private sector involvement or privatization of specific assets.
Utilities: Other public utilities such as gas and electricity supply, and possibly aspects of energy distribution, could see further privatization or greater competition, although energy security concerns could limit this.
Diminishing marginal returns refers to…
Diminishing marginal returns refers to the point of falling marginal output from a worker hired in the short run, causing all cost curves in short run to be u shaped
Satisficing refers to…
Satisficing refers to managers satisfying shareholders by making enough profit to keep them happy enough (below profit max) , whilst they may pursue other objectives after that
NGOs……
NGOs are non govt organisations that help deal with issues in developing economies. Examples include WaterAid and Unicef
Two pros and cons of QE…
Two pros and cons of QE: can overcome liquidity trap, reduce govt borrowing costs via reducing bond yield but most of money stays in financial sector, caused high inflation in UK and increased wealth inequality via increasing bond prices
Trade diversion refers to…
Trade diversion refers to sourcing from higher cost producer in customs union
Two ways to increase FDI are….
lower corporate tax, lower ER, lower regulation
Transfer pricing is when….
two subsidiaries of same company buy and sell to each other such that most profit made in low tax country
Capital flight refers to….
Capital flight refers to when money and capital leave an economy due to falling confidence
Three sources of irrational behaviour…
weakness at computation, herding, habitual behaviour
Diminishing marginal utility refers to…
Diminishing marginal utility refers to falling satisfaction derived per unit consumed
Two pros and cons of free market economies and command economies using theorists….
Hayek stated command economies prevent signal incentive rationing working and lack of allocative efficiency because govt can know what all consumers want; Adam smith endorsed free markets but agreed can lead to monopoly power if not regulated, Marx: allows capital owners to exploit non capital owners
Two things making supply more elastic…
lots of stored supply (storage capacity) , time, ability of industry to switch production
Two things making income elasticity of demand more inelastic…
Two things making income elasticity of demand more inelastic (necessity, low % of income spent)
Three types of market failure in our spec…
under provision of public goods, , information gaps, externalities
