possible questions in economics unit 3 Flashcards
1
Q
advantages and disadvantages of aid
A
- reduce poverty
- increase standard of living
- effects countries economy as there could already by firms from the country operating and giving aid, they can no longer compete with the other competitors and close
this results in higher unemployment and less GDP therefore less GDP per captia, this would increase poverty and decrease economic growth - depends on how many other companies are operating in the country
2
Q
advantages and disadvantages of trade
A
- demand may not be that high as the quality may not be as good
- cant compete with goods and services from advanced economies
- need aid to increase the ability to trade
- it increases trade and exports sold
- make a profit which can be spent on improving infrastructure and education - improve human capital and increase the investment into the country
- depends on if they can compete with the advanced economies
3
Q
advantages and disadvantages of investment
A
investment into infrastructure, increases ability to export and import encourages more investment improve productivity and increases employment - more spending increase economic growth or human capital increase productivity increase GDP, and GDP per captia decrease poverty and higher living standards, increases economic growth and long lasting - long time, drop out
4
Q
advantages and disadvantages of fair trade
A
- increases amount of money producers make from selling their product - sell to the person who is willing to the pay the most money for it
- increases the competition - prevents monopolies and encourages firms to innovate so consumers get best product for their money
- small business
- more money goes to producer which will spend, create multiplier effect this causes economic growth
- fresh vegetables
- money wont go to the workers this reduces the multiplier
- non fair producer have less demand therefore they have to close - unemployment - poverty
- 4% in bananas not having a massive effect
- prevents industrialisation
- depends on where the money goes
5
Q
advantages and disadvantage of NGOs
A
specific areas, particular problems
- not everywhere
outside the government wont have a big as effect on the economy
same as aid
6
Q
what are the policies to improve international competitiveness? 12 marks
supply side
A
supply-side
- education and training
- workers more productive
- higher output
- lowers average costs they can sell for a lower price making them more competitive
- leads to new ideas and inventions - increase productivity and produce a higher output at lower costs
- demand has to be there to reach supply
- wont work if demand is price inelastic
- long time lag
- lasts long
- might drop out
- depends on the need for competitiveness
7
Q
what are the policies used to increase international competitiveness? 12 marks
monetary
A
- drop interest rate
- less demand for euros
- depreciation for euros
- losses its value
- exports are cheaper and they will be higher in demand and more will be sold
- less imports into Eurozone as they are more expensive
- trade surplus
- might not work
- price inelastic the quantity demanded does not change with price
- household incomes decreasing therefore less disposable income, less demand
- quality not good, less demand
- overall it depends on comparison of interest rates.
8
Q
what are the policies used to increase international competitiveness?
fiscal
A
- cut cooperation tax
- encourage investment
- bring innovation and employment
- more productive, increase GDP, lower average costs lower price more competitive
- less tax revenue for spending
- might not move in
- overall depends on how quickly they want to increase competitiveness - lower interest rates most quick
9
Q
single currency
A
- no change in exchange rate
- no transaction costs
- deals
- jobs - skilled worker - productivity
- investment - jobs, innovation, productivity
- long term planning
- monetary - easier to borrow money so investment more likely
- mortgages
- conflict
- recession
- Eurozone has higher inflation as it has lower interest rates - prices are rising
- depends on how close they are
10
Q
why are exports a reason for slower economic growth
A
- demand might not be there in a situation like a recession
- companies wont make profits and have less output required so they will decrease employment
- structural unemployment
- no spending
- multiplier in reverse effect
- slow economic growth down
11
Q
why are exports are reason for faster economic growth
A
- high demand for commondities such as oil
- charge a higher price as inelastic in demand
- more money to spend on education and investment
- increase productivity
- more output and GDP
- higher economic growth
- oil firms employ mrore people
- spend more
- it depends on the price staying high or loosing price
12
Q
why is low external debt burden a reason for higher economic growth ?
A
- gov has more money to spend
- education and training
- investment
- increase productivity
- increase output
- increase GDP and faster economic growth
- FDI
- depends what gov spends on
13
Q
why is high external debt burden a reason for slower economic growth ?
A
- have to pay back
- less money on education and training,
- decrease productivity and GDP
- slower economic growth
14
Q
why are smaller economies a reason for high economic growth?
A
- more GDP as you only need a small percentage to increase it.
- more GDP per capita, higher economic growth
15
Q
why is inward Chinese investment a reason for faster economic growth?
A
- FDI - improves productivity
- increases number of jobs
- incomes increase - spend more
- multiplier effect
- more GDP - economic growth
- could pull out - cause unemployment
