Globalisation

Question 1

Globalisation

Answer 1

The trend for markets to become worldwide in scope and more interconnected. Increases the volume of trade between countries and has caused more people to migrate overseas.

Question 2

Multinational company

Answer 2

Produces goods and services and trades in more than one country. Also called transnational corporations (TNCs).

Question 3

Globalisation benefits

Answer 3

Increases all markets, cheaper materials nd production opportunities, if a country has a cost advantage on a good or service it can specialise in it’s production and sell globally for lower costs, competition makes firms more efficient and gives consumers the choice of lower prices for higher quality.

Question 4

Drawbacks of globalisation

Answer 4

Firms face more competition (likely with cheaper costs and larger production scale). TNCs have become very powerful. It’s caused industries in some countries to shut down due to competition and creates unemployment. A change in one country’s economic state can severely impact others.

Question 5

Exports

Answer 5

goods and services produced in one country and sold in another

Question 6

Imports

Answer 6

Goods and services purchased from overseas and sold in the domestic market. Might be used to buy from countries with lower production costs as that’ll likely make products cheaper.

Question 7

Exchange rates

Answer 7

The value of one currency expressed in terms of another.

Question 8

Rise in the exchange rate

Answer 8

Fewer pounds needed to buy from other countries making imports cheaper. More units of foreign currency needed for each pound making UK imports more expensive likely reducing sales.

Question 9

Fall in exchange rate

Answer 9

Imports more expensive; more pounds are needed per unit of foreign currency. Uk exports cheaper; fewer units of foreign currency needed to buy them.

Question 10

Stable exchange rates

Answer 10

When a monetary authority fixes the value of one currency against the value of another.

Question 11

Exchange rates impacts on businesses

Answer 11

A FALL: decreases the price of exports probably leading to more sales. Will make imported products more expensive, increasing prices for some businesses.
A RISE: increases the price of exports which may or may not reduce profits due to changes in the amount of sales. Makes imports cheaper giving a cost advantage to those who sell imports.

Question 12

Inward investment

Answer 12

When another country invests into our economy. For example: to build new factories.