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The International Economy > The international economy > Flashcards

The international economy Flashcards

1
Q

what is globalisation

A

increase rate of interdependence of national economies through growth of trade, investment, trade, and trade barriers

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2
Q

Causes of globalisation

A

Growth of WTO, deregulation, technology, MNCs, economies of scale, geopolitical changes

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3
Q

4 main characteristics of globalisation

A

free trade in goods/services,
increasing foreign ownership of companies
increasing movement of labour & tech. across borders
easy flow of capital across borders

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4
Q

Consequences of Globalisation

A

tax avoidance becomes easier exploit loopholes

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5
Q

Consequence of globalisation for less-economically developed countries

A

Reduction in absolute poverty
Employment opportunities
Depletion of natural resources
Increased power of monopolies

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6
Q

Consequence of globalisation for more-economically developed countries

A

Increased trade
Increased capital flow

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7
Q

what is a multi-national corporation (MNCs)

A

has business operations in at least one country other than home country

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8
Q

role of mncs on globalisation

A

Cross border trade,
Tech. flow
Labour mobility
Capital Flow

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9
Q

cause of international trade

A

because of absolute and comparative advantage

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10
Q

what is comparative advantage

A

when country should specialise in the goods/services that it can produce with the lowest opportunity costs

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11
Q

Assumptions of comparative advantage

A

Transports costs are zero
There is perfect knowledge
Factor substitution is easily achieved
Constant costs of production

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12
Q

What is absolute advantage

A

country can produce using fewer FOP than other countries

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13
Q

How to illustrate absolute and comparative advantage

A

PPF diagram

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14
Q

what is free trade

A

movement of goods/services across borders without barriers to trade

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15
Q

benefits of trade

A

Flow of new ideas
Economic development
Economic Growth
increased efficiency
Access to resources
International cooperation
Greater Choice
Lower prices

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16
Q

How can trade lead to greater choice

A

more variety, standard of living improves

17
Q

How can trade lead to lower prices

A

competition increases, benefit from economies of scale costs fall and consumers benefit in the form of lower prices

18
Q

How can trade lead to international cooperation

A

helps better country relationship

19
Q

The disadvantages of international trade

A

Deficit on the current account - countries import more than export
Unemployment -
Overspecialisation
Loss of sovereignty
External Shocks

20
Q

Reasons for changes in UK trading patterns

A

Patterns of trade can change
Comparative advantage
Impact of emerging economies
Growth of trading blocs
Changes in exchange rates

21
Q

what is protectionism

A

set of policies and practices that aim to restrict or limit international trade to protect a country’s domestic industries from foreign competition

22
Q

why countries adopt protectionist policies

A

Protect infant firms from lvl of global competition
Sunset industry
Employment (intervene when certain industries step in to protect jobs
Current account deficit

23
Q

disadvantages of protectionism

A

Price increases
Costs increase
Exports become less competitive
Choice reduce
Inefficient domestic firms
retaliation from other countries

24
Q

how can protectionism lead to reduced choice

A

Reduces quantity of goods /services to countries to customers

25
Q

how can protectionism lead to increased prices

A

reduces supply of goods/services leads to higher prices

26
Q

how can protectionism lead to retaliation from other countries

A

countries may be hurt then retaliate in their own measures which can hurt free trade

27
Q

what is a tariff

A

tax on imported goods
domestic producers have to pay when good crosses border into country
raises cost of production
leads to higher prices

28
Q

diagram of tariff

A

like minimum price graph but label it add the tarrif and the new quantity at the new line is the new amount of imported goods

29
Q

analysis of tariff diagram

A

The International Economy (6 decks)

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