Theme 3

Question 1

what are employment patterns

Answer 1

the types of jobs people do, who employs people and how many people are employed at a given time

Question 2

what is nominal value

Answer 2

the current price without taking into account inflation

Question 3

what is the real value

Answer 3

the current price whilst taking into account inflation

Question 4

what are exports

Answer 4

the selling of goods and services to other countries

Question 5

what are imports

Answer 5

the buying of goods and services from other countries

Question 6

what is trade liberalization

Answer 6

the removal or reduction of restriction or barriers such as tariffs on the exchange of goods between countries

Question 7

what is integration

Answer 7

among nations to reduce or eliminate trade barriers

Question 8

what is FDI

Answer 8

foreign direct investment - cross border investment in a separate economy from the country the investor is in

Question 9

what is structural change

Answer 9

the move from one sector to another e.g. the primary sector to manufacturing or the secondary sector to services

Question 10

what is horizontal FDI

Answer 10

the duplication of production facilities in different countries

Question 11

what is vertical FDI

Answer 11

different stages of the production process occur in different countries

Question 12

what are trading blocs

Answer 12

when the governments of a group of countries agree to trade together freely

Question 13

what is trade creation

Answer 13

when trade shifts as a result of membership of a trading bloc from a high costs producer to low costs producer

Question 14

what is trade diversion

Answer 14

when trade shifts as a result of membership of a trading bloc from a low cost producer to a high costs producer

Question 15

what is a preferential trade area

Answer 15

members agree to either reduce or eliminate trade barriers for a select number of goods or services resulting in partial trade liberalization.

Question 16

what is a free trade area

Answer 16

member agree to either reduce or eliminate trade barriers for all goods and services, resulting in trade liberalization

Question 17

what is a customs union

Answer 17

members agree to the removal of trade barriers amongst themselves and a common approach to trade barriers when dealing with countries outside the bloc.

Question 18

what is a common market

Answer 18

members agree to removal of trade barriers as well as the freedom of movement of factors of production within the bloc.

Question 19

what is an economic union

Answer 19

includes both the features of a customs union and common market

Question 20

what is protectionism

Answer 20

when a country takes action to protect its own industries by restricting trade with other countries

Question 21

what is a comparative advantage

Answer 21

an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners

Question 22

what is an infant industry

Answer 22

when a young industry is unlikely to be able to compete against established MNC in developed countries thus require protection

Question 23

what is dumping

Answer 23

when there is over production in a developed country and it maybe developed in a market of a developing nation which undercuts domestic prices and forces domestic producers to leave the market

Question 24

what are import quotas

Answer 24

a physical limit on the volume of imports entering country

Question 25

what is consumer surplus

Answer 25

the difference between the price a consumer is willing to pay for a product and the price they actually pay

Question 26

what is producer surplus

Answer 26

the difference between the price a producer is willing to supply a product and the price actually received for the product