International Competitiveness 4.1.9

Question 1

What are the benefits of being internationally competitive

Answer 1

Export revenue increases, increases AD, increases living standards

Question 2

Measures of international competitiveness

Answer 2

Export prices
Unit labour costs

Question 3

How do export prices measure international competitiveness

Answer 3

If a country’s export prices are lower than its competitors’ then that country is more competitive

Question 4

How do Unit labour costs measure international competitiveness

Answer 4

If unit labour costs are high, prices are high, less competitive

Question 5

What are unit labour costs and formula

Answer 5

The average amount spent on wages per unit

Total wage cost/Total output

Question 6

4 Factors influencing international competitiveness

Answer 6

Exchange rates
Wage costs
Non-wage costs
Supply-Side policies

Question 7

How do exchange rates influence international competitiveness

Answer 7

Depreciation will decrease the price of exports and cause an increase in international competitiveness.

Question 8

How do Wage costs influence international competitiveness

Answer 8

Increases in wage costs will increase cost of production and lead to a left shift SRAS curve price level increases less internationally competitive.

Question 9

How do Non-wage costs influence international competitiveness

Answer 9

Increases in non wage costs increase price level decreasing international competitiveness

Question 10

What are some examples of non wage costs

Answer 10

Regulations
Pensions
Tax

Question 11

How do supply-side policies influence international competitiveness

Answer 11

Increase in AS decreases price level exports become cheaper international competitiveness increases