Paper 2 Flashcards
What factors determine the rate of pay?
- Interaction of demand and supply of labour
- pay: skills and education
- workforce planning
- the impact of trade union and professional bodies
How are index numbers helpful?
They enable accurate comparisons to be made
What is the formula for index numbers?
current year value / base year value X 100
What is a trade bloc?
Groups of countries where trade barriers are reduced or eliminated between member states.
What is trade creation?
When there is an increase in the total amount of goods and services traded because of reduced trade restrictions within a trading bloc
What is trade diversion?
This is when a trading bloc reduces imports from non member states, enabling businesses within member states to increase sales inside the trading bloc.
What is a free market?
- Where there is free movement of people and capital
- Individuals in all member countries can work in any other member country
- Businesses based within a common market can invest in any member country.
What are the benefits of trading within a trading bloc?
- Access to member states without trade restrictions
- No tariffs on imports from member states leading to lower prices benefitting businesses and customers
- Economies of scale
- Creates a larger market and attracts FDI
- Spreading of risk
What are the constraints of trading in a trade bloc?
- No protection for domestic industries competing with other trading bloc members
- Higher competition for domestic producers
- Can take a long time to join trading bloc and make new rules
What impact can firms operating in a trading bloc face?
- It will benefit businesses that can increase exports within a trading block
- Businesses competing with other firms in the trading bloc will face more competition
- Some businesses might resist regulations that aim to improve working conditions.
