Globalisation

Question 1

Which of the following is an example of financial capital?

Answer 1

money used for investment

Question 2

What is one of the main ways that financial capital moves across countries?

Answer 2

Financial capital can move between countries through Foreign Direct Investment.

Question 3

FDI

Answer 3

FDI is an investment made by a firm in one country into a firm in another country, to gain control over the foreign firm.

Question 4

Ellen is a British worker who is writing contracts for a German transnational corporation. Ellen’s work is an example of:

Answer 4

C An export of a service, because Ellen is selling to a foreign firm.

Ellen is providing a service rather than a good as the firm is not buying a tangible product. It is exported because Ellen is selling her services to a foreign firm and so money is flowing into the economy.

Question 5

Which of the following would cause an increase in the trade-to-GDP ratio?

Answer 5

GDP is on the bottom of the trade-to-GDP formula. If GDP decreases, you would be dividing by a smaller number, which would give a larger answer. So, a decrease in GDP will actually increase the trade-to-GDP ratio. If trade stays the same and GDP increases then trade is taking up a smaller percentage of GDP.

Question 6

Globalisation

Answer 6

Increased integration of different economies around the world.

Question 7

Foreign Direct Investment

Answer 7

An investment made by a firm in one country into a firm in another country, to gain control over the foreign firm.

Question 8

Transnational Corporation

Answer 8

A transnational corporation is a company that operates in two or more countries.

Question 9

Characteristics of Globalisation

Answer 9

1. An increase in international movement of labour
2. An increase in international movement of financial capital
3. An increase in specialisation
4. An increase in international trade
5. An increase in trade-to-GDP ratios.

Question 10

Which of the following is one reason to explain why increased specialisation is a characteristic of globalisation?

Answer 10

The Theory of Comparative Advantage says that global output will increase if countries produce according to their comparative advantage.

Question 11

Containerisation

Answer 11

An efficient and relatively low cost system of transport that uses a common size of steel container to transport goods.

Question 12

Trade Liberalisation

Answer 12

The reduction and removal of trade barriers.

Question 13

Tariff

Answer 13

A tax on imported goods

Question 14

Causes of Globalisation

Answer 14

Improvements in transport
Improvements in IT
Containerisation
Trade liberalisation

Question 15

Tariff

Answer 15

A tax on imported goods

Question 16

trade-to-GDP ratio

Answer 16

the sum of exports and imports divided by the gross domestic product.

Question 17

What is the impact of purchasing economies of scale on long run average costs?

Answer 17

The purchasing economies of scale will reduce long run average costs as output increases.

Question 18

Which of the following explains what is meant by transfer pricing?

Answer 18

Transfer pricing is a method whereby TNCs reduce the amount of corporation tax that they pay by shifting their profits into countries with low tax rates.

Question 19

Transfer pricing

Answer 19

A method of pricing goods and services transferred within TNCs in order to reduce the amount of corporation tax paid.

Question 20

Impact of Globalisation on Individual Countries

Answer 20

Globalisation has led to an increase in living standards but also an increase in overdependence.

Question 21

Impact of Globalisation on Governments

Answer 21

Globalisation has led to an increase in tax revenue but also an increase in transfer pricing.

Question 22

Impact of Globalisation on Producers

Answer 22

Globalisation has reduced costs through relocation but it has also increased barriers to entry.

Question 23

What is a remittance?

Answer 23

A remittance is a transfer of money by a foreign worker to an individual in their home country.

Question 24

What is structural unemployment?

Answer 24

Structural unemployment occurs when the structure of the economy changes. People working in one sector may lose their jobs while another sector expands.

Question 25

Impact of Globalisation on Consumers

Answer 25

Globalisation has led to an increase consumer choice and lower prices but it has arguably reduced happiness.

Question 26

Impact of Globalisation on Workers

Answer 26

Globalisation has led to an increase in international job opportunities but increased structural unemployment.

Question 27

Impact of Globalisation on the Environment

Answer 27

Globalisation has increased international cooperation to fight climate change but it has increased global warming.

Question 28

four main causes of globalisation

Answer 28

1. Improvements in transport .
2. Improvements in IT or information technology .
3. Improvements in shipping such as containerisation .
4. Trade liberalisation .

Question 29

Which of the following shows an impact of globalisation on workers?

Answer 29

A An increase in structural unemployment

Question 30

Whats happened to transfer payments under globalisation

Answer 30

Globalisation has led to an increase in transfer payments where TNCs attempt to reduce the amount of corporation tax that they have to pay on their profits. Trade liberalisation (the reduction in trade barriers) has made transfer payments slightly easier but it hasn’t had a huge impact on this.