questions to catch up on

Question 1

ADVANTAGES OF INTERNATIONAL TRADE:

.

Answer 1

Free trade encourages a more efficient use of resources.

If countries specialise in production of goods/services in which they have absolute or comparative advantage they will increase output.

Specialisation leads to lower average costs of production that can be passed onto consumers in the form of lower prices.

Exposure to international trade may force companies to become more competitive and hence more efficient. International free trade reduces the danger of home monopolies.

UK firms have access to larger markets (ID) so can benefit from economies of scale

UK consumers have more choice of goods/services (ID) because countries specialise in different goods/services (EXP) (1). This improves standards of living

UK consumers have access to cheaper goods/services (ID) which means their real income increases (EXP) (1) Standards of living increase (DEV) (1)

Question 2

DISADVANTAGES OF INTERNATIONAL TRADE:

Answer 2

Home employment may be affected due to foreign competition.

Imports will deteriorate a weak balance-of payments position (difference between imports and exports).

New or ‘infant’ industries, which have not yet grown to a size big enough to allow them to compete effectively with their overseas rivals (who are benefiting from economies of scale) may fail.
Consumers are
not protected from harmful products (more commonly known as demerit goods), e.g. illegal drugs, dangerous animals.

There is no protection from the selling of goods, by foreign producers, at prices below the cost of production – known as dumping. This may be done to gain a foothold in new markets or to get rid of surpluses.

Question 3

Describe the theory of comparative advantage.

Answer 3

This is when a country can produce goods/services at a lower opportunity cost than others (1).

This means it would sacrifice less of one good in order to produce another good (relative to a second country) (1).

A country will benefit by specialising and producing this good or service (1). This would ensure world output/standard of living would increase (1).

Then rest of the marks are gained from showing a table with examples

Question 4

Describe the theories of absolute and comparative advantage.

Answer 4

Absolute advantage
Refers to a situation where countries are more efficient at producing some good/services than other countries. (1 mark) This could be a result of low cost labour/high skilled labour/factor endowment/ climate. (1 development mark)
For example, China has a large low cost labour force giving it an absolute advantage in textile production. (1 development mark)
Any country with an absolute advantage should specialise and trade. (1 development mark) This will lead to increased world output and improved living standards. (1 development mark)

Comparative advantage
Shows that even if a country is less efficient at producing all goods and services it should still trade.(1 mark)
Such countries should examine the opportunity costs of production to identify the goods/services they are ‘least worse’ at producing. (1 mark)
Such countries should trade in the good/service which incurs the lowest opportunity cost. (1 mark)

Question 5

Why would a foreign firm want to set up part of its business operations in another country

Answer 5

Developing countries may be abundant in natural resources which could be very useful to a firm

Developing countries cost of labour is lower so mnc, will invest in developing countries to exploit lowr cost labour in production

In developing countries regulations and standards are much lower, promoting foreign investment

Question 6

Strategies to attract fdi

Answer 6

Trade and investment agreements - if you get trade deal with ireland then can trade freely with the other 26 countries

Low labour costs attraction of relatively low unit labour costs for example labour intensive manufacturing

Investment in high quality critical infrastructure such as ports and telecoms

availability of natural resources (for example, oil, forests, land)

a skilled workforce (1). This helps improve productivity levels

EU membership (currently) which eliminates trade barriers (1).
This allows a non-EU company to trade as though it were an EU
company

Question 7

Advantages of fdi

Answer 7

Infrastructure improvements ultimately leading to economic growth. For example chinese firms set up firms in africa and build bridges and dams e.t.c.

Better training for local workers leading to improved human capital

Creates new jobs leading to higher per capita incomes and households savings

Lift in level of factor productivity which also increased GNI per capita

Capital deepening - i.e. there is more capital per worker to use in production

Tax revenue may increase as job opportunities may increase as a result of fdi

Question 8

Disadvantages of fdi

Answer 8

local firms may struggle as are faced with increased competition (1)

increased pollution from factories etc (1)

depletion of non-renewable resources
‘screwdriver’ economy may be created where job creation is centred in the low skilled/low paid assembly area or management jobs remain with foreign firm (1)

The profits from the business will be repatriated to the home country. (1) This is an outflow/this is bad for the Balance of Payments/this means less money is circulating in the UK economy

Management jobs may not be created/top jobs in the multinationals may be retained for employees of the home country. (1) ‘Screwdriver’ jobs which are created do not create as much potential for growth/improved standards of living

Tax avoidance by some multinationals reduces government income.

Question 9

define exchange rate

Answer 9

the value of one currency compared to another currency

Question 10

Describe factors which may attract foreign firms to locate in Scotland

Answer 10

availability of natural resources (for example, oil, forests, land) (1)

a skilled workforce (1). This helps improve productivity levels (DEV) (1)

low interest rates (1)
weak pound relative to other currencies

low corporation tax levels
(1). This allows businesses to keep
more of their profits after tax (DEV) (1)

an English speaking population

high levels of disposable income/likely market for the product

Question 11

Discuss advantages for UK firms of a depreciation in the value of sterling.

Answer 11

benefits firms who export their goods and services abroad (1). Goods will be cheaper for foreign consumers (DEV) (1) therefore volume of export sales may increase (DEV) (1)

increases profits for UK firms involved in tourism (1) for example, hotels may benefit from an influx of tourists who will visit the UK

Question 12

Explain the factors that may increase demand for sterling on foreign exchange markets

Answer 12

The volume of UK exports rise (ID) so foreign consumers need to purchase more sterling (1). For example, if more foreign tourists visit the UK they will need access to sterling to pay for UK goods and services (DEV) (1).

UK interest rates rise (ID) so ‘hot money’ inflows may increase (1). This is because investors will convert more currency to sterling to seek a higher rate of return (DEV) (1).

If speculators anticipate that sterling will rise in the future (ID) the demand for sterling will rise as they seek increased profits/returns

Low rates of inflation in the UK (ID) make UK goods/ services appear cheaper, so foreign consumers will demand more sterling to purchase them (

Question 13

Explain the benefits to a developing economy of hosting a multinational company.

Answer 13

The MNC provides job opportunities (ID) as the demand for labour will increase (1). This will reduce unemployment (DEV) (1).

Creates additional tax revenue for the developing economy’s government (ID) which can be used to stimulate growth (1).

multinationals may improve roads, rail networks etc this can benefit whole communities

Increases economic growth (ID) as the MNC increases the developing economy’s output

Question 14

Explain why a strong pound could have british holidaymakers “reaping the benefits of this on the continent”

Answer 14

Imports such as foreign holidays are cheaper (ID) so British holidaymakers will be more able to travel abroad. (1 mark)

UK tourists will be able to buy more Euros for their pound (ID) which will make their holiday seem better value for money. (1 mark)
This means that they can buy more luxurious goods and services/book more expensive/longer holidays abroad.

Including a numerical example is a mark aswell

Question 15

Outline the factors which affect the exchange rate for the pound sterling.

Answer 15

Change in foreign direct investment (1 mark)

Change in demand/supply for UK exports/imports/ pounds (1 mark)

Change in interest rates in the UK

Question 16

Suggest reasons for the fall in the exchange rate of sterling

Answer 16

Low interest rates (1).
Fall in demand for sterling (1).
Fall in demand for UK export
Fall in ‘hot money’ into the UK (1).
low investor confidence

Question 17

Explain the effects on the UK economy of this fall in the value of sterling.

Answer 17

Overseas citizens receive more sterling for their foreign currency (Identification = ID) making UK exports more attractive (Explanation = EXP) (1)
The UK’s balance of payments will improve (ID), as the volume of exports will increase (EXP) (1)
National income/economic growth may rise (ID), as exports increase injections into circular flow of income (EXP) (1).
Unemployment may fall (ID), as firms experience increased demand, so hire more workers

Question 18

Define what is meant by the term ‘globalisation’.

Answer 18

The ability to produce any good or service anywhere in the world (1).This involves using raw materials, capital and technology from anywhere in the world (DEV) (1). It involves selling the resulting output anywhere in the world (DEV) (1). Profits may be declared anywhere in the world (DEV) (1).

Question 19

The EU has the following features:

Answer 19

Free movement of goods and services
Removal of tariffs and quotas

A common set of product, health and safety standards

The removal of tariffs and quotas on imports and exports. This means countries can trade with each other freely with no limits, and helps to lower the costs of production

Countries have to contribute membership fees into the EU

There is a european central bank for the eurozone (countries that have adopted the euro as their form of currency)

Farmers within the EU are provided with subsidies which allows them to keep prices for crops steady and also makes sure that there aren’t any shortages of crops.

Common external tariff
Free movement of labour and capital

Question 20

Advantages of eu membership

Answer 20

Advantages
Eu countries are on average 12% richer a decade after they join than they would be otherwise

Economies of scale - uk firms have access to over 500m people across europe

Increased competition may lead to improved choice and quality with lower prices

Increased number of alliances and joint projects

Lower costs of production with zero tariffs/quotas

Increase mobility of labour and capital could lead to lower business costs and lower unemployment (move to another eu country to get a job)

Question 21

Disadvantages of eu membership

Answer 21

We have become dependent on trade and capital integration with the eu and are now vulnerable to their economic downturns/banking crises/debt crises

Firms have moved to central and eastern europe to cut costs

Bureaucracy - far more paperwork has to be completed to obey all eu rules and policies

Taxation rates not harmonised therefore different rates of vat and corporation tax still create a competitive advantage for some countries

Question 22

Advantages of the single currency

Answer 22

Advantages
Removes transaction cost (previous trade cost an estimated 5% GDP)

Exchange rate stability which makes forward planning easier

Increased inward investment

Greater price transparency

Forces governments to control inflation and budget deficits

The european central bank will be free of political influence

Question 23

disadvantages of the single currency

Answer 23

Loss of monetary independence to the european central bank
Can lead to the expensive costs of having to change price lists,tills and vending machines etc
‘Contagion’ when there are difficult eurozone problems to solve which creates negative sentiment affecting all economies.

Question 24

Explain ways in which globalisation could help reduce the UK national debt.

Answer 24

UK firms may access new/larger markets (ID) which may result in increased tax revenue from tariffs

UK firms may earn more profit (ID) which will increase corporation tax revenue

increased FDI may be attracted (ID) which raises corporation tax revenue/income tax revenue through job creation

more consumption of goods (ID) means higher VAT revenues

Question 25

Describe the roles of:

i) World Trade Organisation (2)

Answer 25

aims to promote free trade (1)
attempts to remove barriers to trade (1)
 hold trade rounds (1)
 mediates in trade disputes (1)
 enforces members’ adherence to agreements (1)
 can impose penalties/compensation (1)

Question 26

International Monetary Fund (2

Answer 26

aims to promote international economic co-operation (1)
lends money to governments (1)
give monetary/fiscal/exchange rate policy advice (1)
makes funds available to countries to meet B of P needs (1)
encourages debt relief (1)
promotes stability in exchange rates (1)
assists countries switching to more market-based economic systems (1)

Question 27

Other than freedom of movement of labour, describe 3 main economic features of the EU.(3)

Answer 27

The removal of tariffs and quotas on imports and exports. This means countries can trade with each other freely with no limits, and helps to lower the costs of production

Countries have to contribute membership fees into the EU

There is a european central bank for the eurozone (countries that have adopted the euro as their form of currency)

Farmers within the EU are provided with subsidies which allows them to keep prices for crops steady and also makes sure that there aren’t any shortages of crops.

Question 28

Explain the effects of the relatively slow recovery in the Eurozone on:

• uk businesses
• uk economy

Answer 28

The EU accounts for a large proportion of the UK’s exports. As a result, this may see a decrease in demand and ultimately profits for uk firms will fall. To ensure firms continue to make profit, some of them may cut some of their costs of production such as labourers, causing unemployment to rise. Due to the lack of employment, aggregate demand within the economy may fall, leading to a negative multiplier effect, which will have a negative impact on businesses due to the decrease in demand.

Uk firms which depend mainly on exports for making profit, may decrease production costs by making workers unemployed, in order to maintain profits. Thus leading to a negative multiplier effect as there will be less spending in the economy.
Uk firms that depend on EU exports for their main source of revenue, may have to cut back on production costs by making workers unemployed. This will have a negative impact on the uk economy as GDP and national income will fall as a result of the decrease in output within the economy.
Due to eu nations in a period of recovery, the demand for uk exports will most likely decrease. This will negatively impact the uk’s balance of payments as its imports will be much higher than their export levels.

Question 29

Explain the impact of rising inflation on the Balance of Trade. 2

Answer 29

Inflation increases prices (ID) which makes exports less attractive/competitive (1).
The volume of exports/demand for exports will fall (ID) which has a negative effect on the Balance of Trade (1).
In comparison to high UK prices, imports will appear more attractive (ID) so demand for/volume of imports will increase (1). The Balance of Trade will worsen (DEV) (1)

Question 30

Other than the Balance of Trade, describe 3 components of the UK Balance of Payments. 3

Answer 30

Current Account
 Trade in services records the value of services traded between countries (1).

 Investment income/net primary income shows the net interest, profits and dividends between the UK and other countries (1).

 Current transfers/net secondary income shows government and private transfers between the UK and other countries/items such as overseas development aid (1).

Capital/Financial Account

 The transfer of ownership of fixed assets (1).

 FDI, eg investment in land, premises and equipment
by UK companies setting up branches overseas and
vice versa (1).

 Portfolio investment shows flows of money between
countries to buy stocks and shares overseas (1).

 Other investment eg ‘hot money’ (1).

Question 31

Describe recent trends in the UK Balance of Payments.

Answer 31

Examples referring to current situation include:
Trade in goods deficit.
Trade in services surplus.
Current account/BoP deficit.

Recent trends:
Trade on goods deficit widening (1).
Balance of payments deficit is increasing (1).
Increase in exports (due to weak sterling) (1).
Deficit on trade in goods increasingly outweighs the
surplus on trade in services (1).
Current account deficit is widening (1).
Trade in services surplus is narrowing (1).

Question 32

Describe how demand and supply for sterling can automatically correct a deficit in the UK’s Current Account of the Balance of Payments

Answer 32

If demand for £ falls, its price will fall/weaken. (1)
A weak price for Sterling makes exports relatively cheap/
imports relatively expensive. (1) This is because it costs less in terms of another currency to buy sterling. (1 development mark)
Cheaper exports means demand for UK exports increases/ dearer imports means demand for imports falls.
(1 development mark)
As exports rise and imports fall the deficit is corrected. (1 development mark)
Sterling is traded freely according to the forces of demand and supply when there is a floating exchange rate. (1 development mark)
A deficit on the Balance of Payments shows that less £ are being demanded than are being supplied.
(1 development mark)
Credit use of an appropriate diagram. (1 development mark)

Question 33

Describe the components of the current account of the UK Balance of Payments.

Answer 33

Trade in goods ie exports and imports of goods. (1 mark) In the UK this is currently in deficit. (1 development mark)

Trade in services ie exports and imports of services. (1 mark) In the UK this is currently in surplus.
(1 development mark)

Investment income ie interest/profits/dividends. (1 mark)

Transfers ie when money moves without any product in exchange. (1 mark) for example aid payments towards international institutions eg EU, IMF etc.
(1 mark)

Question 34

Describe 4 items included in the UK’s balance of payments.

Answer 34

Current account
• Trade in goods, which is the value of exports minus the value of imports of goods (1).
• Trade in services, which is the value of exports minus the value of imports of services (1).
• Investment income/net primary income, for example, interest/profits/dividends (1).
• T ransfers/net secondary income, for example, overseas development aid (1).

Capital/Financial Account
This is the transfer of ownership of fixed assets (1).
Foreign direct investment, for example, land and capital (1).
Portfolio investment in stocks and shares (1).
Other investment, for example, ‘hot money’ (1).
Reserve assets, for example, foreign currency managed by the Bank of England (1).
• Balancing item — net errors and omissions (1).

Question 35

Explain the impact of multinationals locating in Scotland on the UK’s balance of payments.

Answer 35

Multinationals (MNEs) represent an increase in foreign direct investment (FDI) (ID), which boosts flows into the financial account (EXP) (1).
• MNEs produce goods for export (ID), improving current account balance (EXP) (1) and may also produce goods domestically that no longer need to be imported (DEV) (1).
• MNEs import raw materials (ID) worsening current account balance (EXP) (1).
• MNEs may repatriate profits (ID), worsening the investment account/current account balance (EXP) (1).
• MNEs may relocate workers who send remittances home (ID), which reduces net primary income (EXP) (1).

Question 36

Definition of the Balance of Payments

Answer 36

Whenever trade takes place between nations, payment must eventually be made in a currency. The Balance of Payments Account is a statement of the flows of money (financial transactions) between the UK and the rest of the world in a year. It is an economic indicator used to measure the health of an economy.
The Balance of Payments is made up of the Current Account and the Capital Account.

Question 37

Describe the role of the European Central Bank (ECB) within the Eurozone. 3 marks

Answer 37

The European Central Bank (ECB) is responsible for setting monetary policy throughout the Eurozone. Member states set their national budgets within agreed limits for deficit and debt, and determine their own structural policies involving labour, pensions and capital markets. Each country retains its own central bank but they do not have power over monetary policy. The ECB is in charge of setting a common interest rate for the Eurozone. The objective of this is to achieve price stability.

Question 38

Describe the roles of:

i) World Trade Organisation (2)

Answer 38

aims to promote free trade (1)
attempts to remove barriers to trade (1)
 hold trade rounds (1)
 mediates in trade disputes (1)
 enforces members’ adherence to agreements (1)
 can impose penalties/compensation (1)

Question 39

describe the roles of International Monetary Fund (2

Answer 39

aims to promote international economic co-operation (1)

lends money to governments (1)

give
monetary/fiscal/exchange rate policy advice (1)

makes funds available to countries to meet B of P needs (1)

encourages debt relief (1)

promotes stability in exchange rates (1)

assists countries switching to more market-based economic systems (1)

Question 40

Characteristics of Developing Countries

Answer 40

Low GDP per capita, meaning average person will be very poor perhaps living off a dollar a day, low levels of consumer spending in the circular flow of income. Also meaning low government tax revenue

Low saving rates - savings rates are low because the gdp per capita is low, all income is spent on food and shelter.

Reliance on primary production (cash crops)

Dependence on one or two exports

Poor infrastructure (roads, ports, public & merit goods)

Lack of industrial capital (machinery, ICT etc.)

Lack of investment from MNE & the domestic economy

Corrupt & unstable governments

Education levels - low literacy rate

Question 41

Explain ways in which developed economies can provide economic assistance to developing economics (types of aid)

Answer 41

Capital aid (ID) to enable productivity improvements/ greater output. (1) This can be either directly with equipment or by loans/grants. (1 development mark) Examples include, providing equipment, infrastructure, drainage etc. (1 development mark)

Technical aid (ID) to enable better use of equipment etc. (1) Eg giving advice and training to local workers on the best way to use equipment. (1 development mark)

Educational aid (ID) to improve literacy/basic education. (1)

Health aid (ID) to improve health of workers. (1) Eg medicines and inoculations

Question 42

Benefits of Aid

Answer 42

Can provide immediate relief
Provides a starting point for development – FDI may follow a big infrastructure project
Basic needs are met – food, shelter, clothing
Advice & assistance can be given by experts to ensure good procedures are in place quickly
It provides public and merit goods that may only have been available to those who can afford it
Debt relief enable a developing country to reinvest revenue/profit rather than have that money leak out of the economy in the form of debt repayments.

Question 43

Disadvantages of Aid

Answer 43

May not reach those most in need – may end up being used for city wide projects not rural areas
Diverted into military investment or prestige projects.
Funding for capital expenditure (new road) may not be matched by funding for current expenditure (repairs and maintenance).
Tied aid may distort consumer choice for developing nation.
Donor dependency – economy skewed towards aid.
Food aid can drive prices down for local farmers – disincentive to produce.

Question 44

Emerging economies

Characteristics:

Answer 44

Rapid economic growth

Rapid improvements in productivity

Improving standards of living

Rapid industrialisation

Improving standards of living

Rapid industrialisation

Attractive to fdi

Question 45

Describe ways in which the rapid growth rates in emerging economies might affect the UK economy.

Answer 45

Emerging economies provide a market for UK goods and services. (1) Their populations have increasing disposable incomes to spend on UK exports. (1 development mark) This may improve the UK’s Balance of Payments.
(1 development mark)

UK firm’s costs of production may increase due to increased demand on finite worldwide resources. (1)

UK firm’s costs of production may decrease due to cheaper raw materials/components from emerging economies. (1) This may negatively effect the Balance of Payments. (1 development mark) Firms may shed labour to cut costs, causing unemployment.

Question 46

types of trade barriers

Answer 46

Quotas – this reduces choice and makes products more expensive for the consumer e.g. fish plus it causes job losses in the industry affected e.g. food production.

Tariffs (or import duties) – could cause inflation; it is unfair to the consumer who is looking to maximise their effective demand or improve their standard of living.

Embargoes – a black market for the product could occur meaning it gets sold regardless of the quality or the fact that taxes are not paid. Innocent businesses may find trade blocked if they have a trade partnership with a country being punished.

Subsidies – costs the economy money (taxes) to produce a good we could get cheaper elsewhere – e.g. the CAP means we do not benefit from Africa’s comparative advantage in agriculture meaning poor countries cannot trade their way out of poverty.

Question 47

developed country characteristics

Answer 47

High per capita income.

Low incidence of poverty.

High standard of living.

Narrow income inequalities.

Low growth rate of population.

Low level of unemployment.

Question 48

Describe ways in which the rapid growth rates in emerging economies might
affect the UK economy.

Answer 48

Emerging economies provide a market for UK goods and services. (1) Their populations have increasing disposable incomes to spend on UK exports. (1 development mark) This may improve the UK’s Balance of Payments.
(1 development mark)
 UK firm’s costs of production may increase due to increased demand on finite worldwide resources. (1)
 UK firm’s costs of production may decrease due to cheaper raw materials/components from emerging economies. (1) This may negatively effect the Balance of Payments. (1 development mark) Firms may shed labour to cut costs, causing unemployment. (1)
 UK exporting firms may face increased competition. (1

Question 49

Advantages & Disadvantages of the Single European Market

Answer 49

Advantages
Increased trade
EU countries are on average 12% richer a decade after they join than they would otherwise be

Economies of scale – UK firms have access to over 500m people across Europe
Increased competition may lead to improved choice & quality with lower prices

Increased number of alliances and joint projects

Lower costs of production with zero tariffs/quotas

Increase mobility of labour & capital could lead to lower business costs and lower unemployment

Disadvantages
We have become dependent on trade and capital

integration with the EU and are now vulnerable to their economic downturns/banking crises/debt crises

Firms have moved to central and eastern Europe to cut costs

Bureaucracy – far more paperwork has to be completed to obey all EU rules & policies

Taxation rates not harmonised therefore different rates of excise duties, VAT & corporation tax still create a competitive advantage for some countries

Question 50

Describe the reasons why governments restrict trade

Answer 50

To protect an infant industry in a competitive market (1 mark). Restricting trade stops foreign competition and this allows the infant industry to find its feet and to grow. (1 development mark) This is because overseas competitors may have economies of scale as yet unavailable to the infant industry. (1 development mark)

To improve the Balance of Payments by reducing imports. (1 mark) This would reduce demand for imports and therefore help reduce a deficit.
(1 development mark)
(1 development mark)

A trading partner may be acting against human rights (1 mark). This is because restricting trade could put pressure on the trading partner to respect human rights. (1 development mark)

To protect key/strategic industries (1 mark) for example defence construction. (1 development mark)

To prevent ‘dumping’. (1 mark)

To protect employment. (1 mark)

To reduce the quantity of products which do not
meet H&S/Environmental standards.

Question 51

problems with a developing economy hosting a mnc

Answer 51

• Jobs may be lost in smaller firms if they close due to competition from multinationals. Many of the jobs offered by multinationals may be low-skilled jobs. In addition, multinationals often fill management jobs with personnel from the home country. Changing economic or political factors may cause a multinational company to decide to move one of its factories to another country, causing the loss of many jobs
• bop - A multinational may repatriate profits, adversely affecting the balance of payments of the host country as the profits are sent home. A multinational may purchase inputs from their subsidiaries in other countries or the home country, thus increasing visible imports.

Question 52

effects of exchange rate changes on indivuals firms and the economy. if the pound strengthens

Answer 52

Individuals

• Imports more competitive – eg cheaper for foreign holidays.
• Exporting firms may reduce output so may shed labour.

firms
Industries which import their raw materials, components, etc will experience a fall in costs.
- Exports become less competitive so those trading internationally will suffer. Profits will fall.

Increased imports will weaken the balance of payments.
Reducing prices of imports will dampen inflation.

• Decreased exports will weaken the balance of payments.
  Output may fall.
  Unemployment may rise.

Question 53

effects of exchange rate changes on indivuals firms and the economy. if the pound weakens

Answer 53

indivduals

Imports less competitive – eg foreign holidays become more expensive.

Exporting firms may increase output so may employ more labour.

firms

Industries which import their raw materials, components, etc will experience rising costs.

Exports become more competitive so those trading internationally will benefit from increased revenue and profits.

the economy
Decreased imports will strengthen the balance of payments.
Increased prices of imports may cause inflation.

Increased exports will strengthen the balance of payments.
Output may rise.
Unemployment may fall.