Marginal propensity to snort Flashcards
Advantages of trade
specialisation
economies of scale
choice
innovation
Disadvantages of trade
overdependence
jobs
risk
environment
4 factors of economic integration
free trade across national barriers of g&s
free movement of labour
free movement of capital
free interchange of intellectual capital and technology
Causes of globalisation
trade in goods trade in services trade liberalisation multinational companies international financial flow foreign ownership of firms communications and IT
Benefits of globalisation
availability of goods and services fall in relative price of some goods raised incomes jobs in developing countries fill skill gaps wages specialisation costs of production tax
Costs of globalisation
goods more homogeneous prices can rise due to world income rise not every consumer gains structural unemployment domestically low pay forces out dom competition force UK workers to take low pay
Advantages of EU membership
no tariffs sense of unity stops richer countries controlling less wealthy ones reduce exchange rate fluctuation creates more jobs no conflict between nations EU central bank euro
Disadvantages of EU membership
cost inefficient policies-40% on CAP problems with the euro-low growth high unemployment pressure towards austerity net migration
Evaluation of EU membership
cost of EU small relative to gov spending
some jobs threatened if tariffs were to rise outside EU
3rd largest recipient of inward investment
healthcare
UK independence over monetary policy
migration works both ways
Benefits of EU expansion
export potential
exploitation of economies of scale
FDI
diverse European labour markets
Risks of EU expansion
extra budgetary costs for financing EU programmes
social and economic pressures from inward investment
shifts of FDI and jobs to eastern Europe
Benefits of EMU membership
fixed prices reduced exchange rate costs greater price transparency more trade inward investment price stability
Drawback of EMU membership
loss of policy independence
inability to change value of currency
structural problems
break up of monetary union
How is national income data used to make cross country comparisons?
converts GDP to common currency
makes an adjustment to reflect differences in costs of products in each country PPP standard
PPP dollar takes into account its cheaper to live in some countries
Problems with using national income stats to measure living standards
underestimates the growth of real national income per capita overtime due to shadow economy and the vle of unpaid work
shadow economy-includes illegal activity drugs etc.
GDP data can be inaccurate
