Macro Data

Question 1

Why is the end of the cold war a factor which led to globalisation

Answer 1

The end of the cold war between Russia & the West in 1990 opened up former communist countries around the world enlarging the global supply of labour e.g. more than 800,000 people migrated from East Germany to West Germany between 1990 and 1991

Question 2

What is the UK’s inflation target rate

Answer 2

2%

Question 3

UK’s unemployment rate

Answer 3

4.4% in July 2024

Question 4

UK’s debt to GDP ratio

Answer 4

99.5% in June 2024

Question 5

UK global competitiveness ranking

Answer 5

9th

Question 6

Strengths and opportunties for UK

Answer 6

• T-levels should help increase number of people with vocational skills
• The UK remains the world’s second-largest exporter of financial services (£94.9bn)

Question 7

Foreign direct investment into the UK

Answer 7

• Nissan, Sunderland
• Siemens, Hull
• Cummins Pwer Generation, Rumsgate
• AkzoNobel, Ashington

Question 8

Financial market failure

Example of market rigging (UK)

Answer 8

LIBOR scandal: widespread collusion of fixing interlending banking rates
Fined £9bn
Currency manipulation (traders used chatroom)
£350 tn worth of financial contracts affected by collusion

Question 9

Financial market failure

Example of externalities (UK)

Answer 9

• GDP loss by 6.3% (deepest recession since WW2)… shrunk by 6%… LRAS shifts right
• Took mibnimum of 5 years to recover the GDP + wages
• Significant negative output
• Unemployment 8.1% in 2011 (2.5mn out of work)
• Significant fall in the UK productivity (15% fall)
• £137bn on bank bailouts
• 1tn guarantees to stabilise the banking system

Question 10

Financial market failure

Housing market bubble + bitcoin

Answer 10

1996-2007: 200% asset bubble (housing market)
2013-2021: 30% increase in house prices
2017: Bitcoin boom

Question 11

Why is the UK’s Phillips curve steeper

Answer 11

• Endogenous (internal) supply side shock of Brexit, because this reduced labour supply, creating labour shortages, make wages (and cost push inflation) higher as firms increase output to meet demand (& labour inactivity+covid)
• Falling competition/ contestability in UK markets, which makes it more likely firms willl increase prices when wage costs increase

Question 12

What is the ‘Red Tape Challenge’ and how can it improve international competitivness (UK)

Answer 12

Aims to simplify regulation for businesses, so it is cheaper and easier to meet environmental targets and create new jobs. It should help to encourage investment and innovation, so domestic firms can become more internationally competitive.

Question 13

What is the unemployment rate in Zambia

Answer 13

6.1% unemployment rate

Question 14

What is Zambia’s inflation rate

Answer 14

Inflation Rate in Zambia increased to 15.40% in July from 15.20% in June of 2024

Question 15

What do Zambia export most of

Answer 15

According to the factor abundance model, Zambia export copper.

Question 16

Stats on Zambia debt default to China

Answer 16

Zambia owed Chinese creditors nearly $6 billion of the total of $17 billion external debt at the end of 2021.

Debt to GDP ratio is 57%

Question 17

Strengths and opportunties for Zambia

Answer 17

1. ToT is 117
2. Real GDP grew at an average rate of 5.7% in 2021-23, primarily driven by growth in transport, information and communications, finance and insurance, and a rebound in hospitality and education.
3. Worlds youngest median population, with population doubling in 25 years (but impact on labour resources and children)

Question 18

Weaknesses for Zambia

Answer 18

• 59% earn less than $2.15 a day
• Savings ratio over 40% (world average is 23%)
• Large depreciation of currency (over 30%) due to debt issues helped cause inflation

Question 19

Zambia current account deficit stats

Answer 19

The current account fell into deficit in 2023 due to a contraction in copper production and exports for three consecutive years, significantly reducing foreign currency earnings.
Combined with the uncertainty in finalizing Zambia’s debt restructuring, this put pressure on the exchange rate, leading to 41.8% depreciation in 2023.
At the same, the depreciation fueled inflation to rise way above the Bank of Zambia’s 6–8% target range, despite monetary restraint and fiscal prudence.

Question 20

China’s unemployment rate

Answer 20

Highest in 2020 at 4% (urban China)
Currently, 5%

Question 21

China’s inflation rate

Answer 21

0.5%
Deflation, due to lack of consumer and business demand

Question 22

China’s strengths and opportunities

Answer 22

• 32% of global investment is Chinese
• Second largest economy, behind USA and USA’s largest M come from China
• China is the world’s largest exporter
• Main exports: CA in high end tech: electrical machinery (26.6% of total X), machinery including computers (15.4%) and circuits

Question 23

What are the environmental impacts of globalisation on China?

Answer 23

• Severe air pollution in cities like Beijing, where air pollution is regularly above the World Health Organisation safe limits.
• Beijing’s six million cars and coal-burning power stations are the source of pollution.
• Around 50% of China’s rivers and lakes and 60% of its groundwater is polluted - unsafe to drink untreated.
• Air pollution in northern china has been estimated to have reduced life expectancy by nearly five years.
• Loss of biodiversity.

Question 24

Joint ventures in China

Answer 24

Joint ventures are a commonly used company structure in China: many of the well- known companies such as Mcdonalds, Starbucks and most recently the Chinese ride sharing unicorn Didi Chuxing have all adopted a joint venture company structure in China.