International Economcis II

Question 1

Name 3 factors that contribute to globalisation

Answer 1

1. Improvements in transport infrasturture and operations (Quicker & Cheaper Travel)
2. IT & Communication Improvements allows companies to operate globally=
3. TNCs - Lead to taking advantage of low labour costs to achieve higher profits , selling their goods and products around the world.

Question 2

Give 4 impacts of Globalisation on Consumers

Answer 2

1. Wider range of choice
   2.Lower prices
   3.Rise in prices (Incomes rise)
   4.Loss of culture

Question 3

Give 4 impacts of Globalisation on Workers

Answer 3

1. Structural Unemployment - Job loss (e.g manufacturing sectors)
   2.Increased migration > Lower wages > Increase in AD
   3.Wages increase for high skilled labour
2. International competition > Fall in wages

Question 4

Give 2 Impacts of Globalisation to the Government

Answer 4

1. Higher Tax (Tncs & the people they employ pay tax)
   2.Corruption (Tncs have the power to bribe and lobby governments)

Question 5

Give 3 impacts of Globalisation on Economic Growth

Answer 5

1. Investment within countries increases, TNCs represents and injection into the economy , encourages countries to make suuply-side improvements
2. TNCs cause political insatbliltiy as they may support regimes which are unpopular and undemocratic
3. TNCs bring technology which can benefit al industries

Question 6

What are 4 assumptions of The Comparative Advantage Theory?

Answer 6

1. Rhere are no transport costs ,and these could lower or prevent any comparative advantages
2. Costs are constants and there are no economies of scale
   3.Goods are assumed to be homogenous
3. Factors of production are prefectly moble, there are no tariffs or other trade barriers aand there is perfect knowledge

Question 7

Name 4 Disadvantages of Specialisation and trade

Answer 7

1.Trade can lead to over-dependence ( OD of exports/imports)
2. Structural unemployment
3.Environemnt will suffer due to poblems with transport
4.Countries may suffer f rom a loss of sovereignty due to signing international treaties and trading blocs

Question 8

Name 4 factors that influence patterns of trade

Answer 8

1. Comparative Advantage
2. Emerging economies
3. Trading blocs and bilateral trading agreements
4. Relative exchange rates

Question 9

Name 3 Short-run factors that influence Terms of Trade

Answer 9

1. Exchange rates
2. Inflation
   3.Changes in demand/supply of imports or exports

Question 10

Name 2 Long-run factors that influence Terms of Trade

Answer 10

1. Change in Productivity
2. Change in Income

Question 11

Name 5 types of trading blocs

Answer 11

1.Preferential trading areas
2.Free Trade Areas
3. Customs Unions
4.Common Markets
5. Monetary Unions

Question 12

What is the role of the WTO

Answer 12

To bring about trade liberalisation and esure countries act according to trade agreements they’ve signed

Question 13

What are 5 reasons for restrictions on free trade

Answer 13

1. Infant indusrtry arguement , can’t compete in the international market (need to build up reputation and customer base and have to cover alot of sunk costs)
   2.Job protection , allowing imports will mean domestic producers will lose out to international firms
   3.protection from potential dumping
   4.Danger of over-specialisation

Question 14

Types of protectionisn/restrictions

Answer 14

1.Tariffs
2.Quotas
3.Subsidies to domestic producers
4.Non-tariff barriers (embargos)

Question 15

Give 2 Impact of protectionist policies on Consumers

Answer 15

1.Higher prices for consumers as they’re uinable to buy imports
2.Less choice

Question 16

Give 2 Impact of protectionist policies on Consumers

Answer 16

1.Higher prices for consumers as they’re unable to buy imports
2.Less choice

Question 17

Give 3 impacts of protectionist polices on Producers

Answer 17

1. Domestic producers can sell at a higher prices
2. Suffer from higher costs if there’s controls on the imports they need for production
3. Foreign procuers are limitied to where they can sell their goods.

Question 18

Give 2 impacts of protectionist policies on Governments

Answer 18

1. Tariff revenues and they are politically popular
   2.Can lead to an inefficient economy which stifles domestic growth

Question 19

What is an Arguement for Floating exchange rates

Answer 19

The use of floatin exhange rates mean that the centra bank doesn’t need to try to maintain a particular exhance rate and therefore won’t need to use reserves to buy pounds in the market to keep ita at the target.

Question 20

What are 2 ways a governemnt can influence that value of their currency

Answer 20

1. Manipulating Interest rates
2. use gold can foregin currency reserves.

Question 21

What are 2 measures of international competitiveness

Answer 21

1. Relative Unit Labour costs
2. Relative export prices

Question 22

What are 5 factors that influence international competitiveness

Answer 22

1.Exchange rates
2. Productivity
3.Regulation
4.Investment
5.Taxation