theme 4 pros/cons/factors/definitions

Question 1

Factors of globalisation

Answer 1

• Improved transport infrastructure (containerisation)
• improvements in communication and technology
• trade liberalisation
• international financial markets
• TNCs operating globally

Question 2

Impact of globalisation

Answer 2

• trade creation
• higher tax revenue
• increase consumer surplus

Question 3

Limitation of comparative advantage

Answer 3

• assumes no transport cost
• assumes no EOS and costs are constant
• assumes goods are all homogenous
• assumes FOP are perfectly mobile
• depends on countries TOT if trade takes place

Question 4

pros of specialisation and trade

Answer 4

• increase world output and efficiency
• greater choice
• greater competition
• allows EOS from greater output

Question 5

cons of specialisation and trade

Answer 5

• over dependent in imports and exports
• structural unemployment (job loss)
• loss of sovereignty in trade bloc

Question 6

factors of pattern of trade

Answer 6

• comparative advantage
• emerging economies
• trading bloc
• exchange rates

Question 7

(k) terms of trade

Answer 7

Amount of exports needed to be sold to buy imports

Question 8

Types of trading blocs

Answer 8

PTA
FTA
Customs unions
common market
monetary unions

Question 9

advantage of trading blocs

Answer 9

• trade creation
• larger market
• protects economies from cheaper imports
• increase choice
• increase jobs

Question 10

cons of trading blocs

Answer 10

• trade diversion
• fall in competition
• retaliation

Question 11

Reasons for restriction in free trade

Answer 11

• protects infant industries
• job protection
• protection from import dumping
• protection from unfair competition
• improves TOT

Question 12

Types of restrictions on free trade

Answer 12

Tariffs
Quotas
Subsidies
embargoes
import licensing

Question 13

Policies to improve current account deficit

Answer 13

• SSP
• Expenditure switching
• Expenditure reduction

Question 14

factors of exchange rates

Answer 14

• speculation
• current account
• ## FDI

Question 15

Measures of international competitiveness

Answer 15

• relative unit labour cost
• relative export prices

Question 16

Causes of wealth and income inequality

Answer 16

• wages
• welfare payments and taxes
• unemployment

Question 17

What does human development index measure?

Answer 17

• life expectancy at birth
• mean years of schooling
• expected years of schooling
• GNI per capita

Question 18

What theories highlight the cons of primary product dependency

Answer 18

• dutch disease
• prebisch singers hypothesis

Question 19

Define national debt

Answer 19

Total % of GDP that is borrowed, increases due to interest rates

Question 20

roles of central banks

Answer 20

• controls monetary policies
• bankers to government
• bank to other banks
• regulate financial systems

Question 21

Types of government expenditure

Answer 21

Current spending
(spending on public sector)

Capital spending (spending on infrastructure)

Transfer spending (direct payments to households via benefits)

Question 22

Two types of tax systems

Answer 22

regressive - lower tax rate as you earn more income

progressive - higher tax rate as you earn more income