Definitions 4.1

Question 1

Globalisation

Answer 1

the growth of international trade that has made an increasing number of markets global rather than national

Question 2

GDP

Answer 2

the value of all the goods and services produced within a specified time period such as a year

Question 3

Per Capita

Answer 3

this means looking at data per head of the population, to make it easier to make statistics from countries of different size

Question 4

Balance of payments deficit

Answer 4

imports outweigh exports; if it continues indefinitely, it means ever greater build-up of foreign currency debt

Question 5

Fixed Capital formation

Answer 5

an economist’s way of saying investment in long-term assets, such as roads or buildings

Question 6

Invisible export

Answer 6

the sale of a service to an overseas consumer

Question 7

Free trade

Answer 7

no tariffs or quotas

Question 8

Purchasing power parity

Answer 8

adjusting income levels to allow for differences in the cost of living, e.g. a dollar might but three times more groceries in India rather than in America

Question 9

Trading bloc

Answer 9

A regional grouping of countries agreeing to free trade and - sometimes - free movement of labour; the EU is a trading bloc

Question 10

Inward foreign direct investment

Answer 10

investment into a country such as the UK from companies abroad, perhaps in the form of buying up one of our businesses, or buying up property assets

Question 11

Outward foreign direct investment

Answer 11

investment from a country such as the Uk, perhaps building a factory in Brazil (e.g. JCB) or buying property in Nairobi

Question 12

Saturated market

Answer 12

one where (nearly) everyone who wants an item already has it, so sales can stables or slip back e.g. fridges in the UK

Question 13

Scientific management

Answer 13

F.W. Taylor suggested that managers should maximise worker productivity by calculating how best to divide up tasks into smaller fragments, then incentivise workers to produce exactly as set out by managers (often includes a piece-rate pay)

Question 14

Liberalisation

Answer 14

minimising the rules and regulations faced by businesses; or, on a global scale, reducing the barriers to freely moving international trade

Question 15

Regulations

Answer 15

rules created as a result of laws passed by parliament

Question 16

Counter-cyclical

Answer 16

expansionary government policies to counter a downturn in the economic cycle

Question 17

Keynesian

Answer 17

an economic policy based on the views of British economist John Maynard Keynes, who urged governments to take action to boost economies when hit by recession (so-called ‘counter-cyclical policies’)

Question 18

Structural unemployment

Answer 18

potentially long-term unemployment as a fundamental economic shift makes an industry and therefore the skills of its workers obsolete e.g. the widespread closures of coal mines and clothing factories in 1980s Britain

Question 19

Trade War

Answer 19

an economic battle between two countries based entirely on protectionist measures such as import quotas; one starts, so the other retaliates and this can spiral out of control

Question 20

Home market

Answer 20

the number of customers that can be reached without needing to jump administrative hurdles; the Empire once provided Britain with the world’s biggest home market; today the EU provides a smaller equivalent

Question 21

Single Market

Answer 21

dismantling trade barriers within Europe so that all 28 countries can treat the whole region as their home market

Question 22

Pull factors

Answer 22

positive factors overseas that entice a UK business to look outside the UK

Question 23

Push factors

Answer 23

negative factors within the UK that push a UK business to look overseas

Question 24

Outsourcing

Answer 24

contracting another business to perform a business function on your behalf. This could be anything from outsourcing catering at your school to Apple outsourcing iPhone assembly to Foxconn

Question 25

Saturated Market

Answer 25

market where growth has ceased and there are no single significant opportunities to boost sales other than stealing market share from existing rivals

Question 26

Disposable income

Answer 26

household earnings minus direct taxes such as income tax and national insurance

Question 27

Market attractiveness

Answer 27

an early analysis of the current and future sales and profit potential of a country or market

Question 28

Bureaucracy

Answer 28

a business or government that is bound up in rules - often strangling initiative and enterprise

Question 29

Multinational

Answer 29

a company based in one country but with operations in many

Question 30

Generic products

Answer 30

undifferentiated; in the case of pharmaceuticals they’ll be chemically identical