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A level edexcel Economics > Theme 4 > Flashcards

Theme 4 Flashcards

1
Q

globalisation

A

the process in which national economies have become increasingly integrates and interdependant

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2
Q

Causes of globalisation

A
  • trade liberalisation
  • trading blocs
  • growth of MNCs
  • technological advances
  • greater mobility of labour and capital
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3
Q

advantages of globalisation

A
  • lower prices
  • benefits of trade
  • greater employment
  • larger economies of scale
  • free movement of labour and capital
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4
Q

disadvantages of globalisation

A

Growing inequality
Higher structural unemployment
Environmental costs
Trade imbalances
Risk of external shocks
Less cultural diversity

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5
Q

absolute advantage

A

When a country can produce a product using fewer factors of production than another nation

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6
Q

comparative advantage

A

A country should specialise in the goods and services it can produce at the lowest opportunity cost, and then trade with another country

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7
Q

specialisation

A

When a worker, firm, region or country produces a narrow range of goods and services

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8
Q

advantages of specialisation and trade

A

-lower prices and more choice
-larger market = Eos= lower prices
-higher eco growth and living standars= higher employment(labour is derived demand)= increase gdp and growth

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9
Q

disadvantages of specialisation and trade

A

-Trade deficits: country with no CA = lower exports
-risk of dumping: FDI lower prices in domestic firm= push them out of market
-increase exposure to external shocks: In recession,demand for imports decrease= lower exports for country they trade with( cuz of inter dependent)= export rev lowers in other countries too = trade deficits and lower eco growth

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10
Q

patterns of trades - factors influencing it

A

exchange of goods/services between countries
1)Comparitive advanatge:Uk shift from manufacturing to services = lower manu jobs in uk and more manu jobs in china = industrilaisation in china and india

2)emerging economies:they shift trade by taking up larger proportion of a country inports/exports(china take up 20% of LDC economies copared to 8% for USA)

3)trading blocs and bilateral trade agreement: lead to increase trade brtween thes ecounties and decrease trade outside countries e.g Uk and EU and USA

4)relative exchange rates: Uk trade deficit with EU due to strong pound

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11
Q

terms of trade equation

A

(Weighted average of export prices) / (Weighted average of import prices) x100

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12
Q

terms of trade

A

Indicates the quantity of exports that must be sold to purchase a given level of imports

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13
Q

improvement and deterioration of ToT

A

Improvement in TOT = caused by increase export price OR decrease import price
deterioration in TOT = caused by decrease export price OR increase import price

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14
Q

factors influencing the ToT (short run)

A

change in demand/supply of exports/imports

Inflation rates: increase export prices( Imporvement in TOT)but lower export comp

Exchange rate movements:SPICED (Imporvement in TOT)

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15
Q

factors influencing the ToT (long run)

A

Incomes: rise lead to increase demand e.g tourism in greece = price for tourism incr(Cetirus paribus improvement TOT)

Productivity: decr cost and prices of exports relative to import prices(deteriation of TOT) but incr competitivness

Technology
IMPACTS:
-Elasticity of imp/exp(PED inelastic = improvment will improve current acc)(PED elastic= improvement will worsen current account)
-improvement in TOT= decr GDP and incr unemployemetn level due to inc/decr imp/exp demanded due to change in price

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16
Q

trading bloc

A

A group of countries that join together and agree to increase trade between themselves:
-reduce tariff quotas and other protecionist barriers
NAFTA, EU, ASEAN
-BIlateral/multilateral trade agreement: reduce protectionsm between 2 or more countries

17
Q

Free trade area

A

No trade barriers
Can trade with other countries

18
Q

Customs Union

A

No trade barriers( tariffs)
Common external barrier( accept external tariffs on non members)

19
Q

Common Market

A

No trade barriers
Common external barrier(tariff)
Free movement of labour and capital: (EU citizens can work in any country in EU)

20
Q

Monetary Union

A

No trade barriers
Common external barrier
Free movement of labour and capital
Common currency and central bank: 2 or more countries with single currency and ER monitored and controlled by one CB(european CB in eurozone)
E.g EU, west africa use the same IR

21
Q

costs of regional trade agreement

A

-cant trade with other countries in other trading blocs= ruin world trade= v benifit of specialisation
-v competiton:inefficient firms driven out of market= olygopolistic market
-regional inequality ^: loss of resources due to richer countires attract more capital and labour

22
Q

benefits of regional trade agreements

A

-Encourages specialisation: ^output accoriding to comparative adv= benifit from Eos= vprices and costs
-Firms grow larger due to larger customer market= Eos ^ overtime
-competition^=innovation and v prices= imporovement in productive and allocative efficieny
^trade= ^jobs
-protection from cheaper imports from countires outside trading bloc
-^consumer choice

23
Q

WTO

A

International organisation that regulates world trade( replaced GATT in 1995)
- aim to bring about trade liberalisation(removal of protectiosnm) and ensure countries act according to the trade agreement theyve signed

24
Q

WTO’s ideal world trade

A

Non-discriminatory
Free from barriers/protectionism
Predictable
Promotes fair competition
Beneficial for developing countries

25
Q

Roles of WTO

A

-Set and enforce rules of international trade
-Resolve trade disputes
-Provide a forum for negotiating trade liberalisation
-To monitor further trade liberalisation
-Increase transparency of decision making process
-Help developing countries benefit
-Cooperate with other major economic instituions

26
Q

How WTO conflicts with trading blocs

A

-Distort world trade as they neglect developing countries as developed ones dont trade freely with developing

-Inefficient allocation of resources

-Increased protectionism with non-member countries VS no protectionsm (averse effects on non-member states)

-WTO loses power as trading blocs become more powerful

27
Q

Reasons for restrictions - protectionism

A

A level edexcel Economics (5 decks)

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