Topic 31 - Topic 32 Flashcards
What is economic growth?
Economic growth is defined as the change in the total value of goods and services produced in a country from one year to the next.
What is GDP?
The total value of all goods and services produced in a country in any one year is known as the Gross Domestic Product (GDP).
What is GNP?
Gross National Product represents the total value of all goods and services produced by Irish companies or individuals both in Ireland and abroad. The activities of foreign-owned companies operating in Ireland are not included in GNP.
List the benefits of economic growth
- New business start-ups will reduce unemployment
- Incomes rise, so people enjoy a higher standard of living.
- The government has more money to spend on health and education.
- Young people will not have to emigrate to find work.
What is inflation?
Inflation is defined as a rise in the cost of living from one period to another.
What is an economic boom?
An economic boom describes a period of substantial economic growth in an economy over a period of time.
• Wage levels rise
• Production increases.
• Prices increase, leading to a rise in inflation.
What is a recession?
A recession describes a period where economic activity drops considerably over a number of months.
• There is a slowdown in production.
• Employment levels fall.
• Demand falls.
• There is low inflation, as prices remain the same, or fall.
What is a depression?
A depression describes a recession that lasts for a considerable time and results in a long-term reduction in the level of production of goods and services in a country.
• Increasing unemployment
• Fall in demand for goods and services.
• Reduced consumer spending as consumers choose to save more.
• Inflation remains low.
What are the positives of economic growth?
- Economic growth leads to increased employment, as firms need to hire more staff.
- Government income increases due to increased employment and reduced social protection payments.
- Foreign direct investment, from companies like Google and Apple takes place.
- Fewer Irish families like in poverty.
What are the negative impacts of economic growth?
- Economic growth can widen the gap between rich and poor.
- Increased emphasis on work may result in less family and social time, which can. Affect wellbeing.
- Output and employment in agriculture can fall dramatically, as a result, many small farms close while others struggle to survive.
List the impacts of economic growth on the environment?
- Increased finance for the government to promote sustainability and meeting climate change commitments.
- More money available to spend on pollution control by private businesses.
- Households have more income to spend on insulating their homes and energy efficient cars.
What are TNCs?
Transnational Companies (TNCs) are companies that have operations in several countries in addition to their home country.
What is international trade?
International Trade is the sale of goods and services between different countries.
What is importing?
Importing is when goods or services are brought from one country into another.
What is exporting?
Exporting is when goods or services are sent from one country to another.
What is visible trade?
Visible trade id referred to as the import and export of physical (visible) goods.
What is invisible trade?
Invisible trade is the import and export of services.
List reasons for importing
- Ireland does not have some natural resources such as oil and steel.
- Ireland’s climate is not suitable for growing certain products, like coffee, oranges and bananas
- Irish people see advertisements on social media and online for goods and services all over the world, which increases demand for these goods among Irish consumers.
- Irish consumers may want products that are manufactured abroad such as Swiss chocolate or French cheese.
List reasons for exporting
- Consumers in other countries want to buy Irish products like butter, milk and meat, as the quality is excellent.
- Ireland exports food products to other countries that are unable to produce these items, due to land or climate being unsuitable.
- Irish companies export to other countries in other to boost their sales and profits.
List the benefits of international trade?
- Irish companied have access to a much larger market in European than just the home market.
- The Irish government benefits from increased tax revenue.
- Irish consumers have a broader range of products and services.
- Irish consumers will benefit from lower prices, as different producers compete for business.
List the barriers to trade?
- Tariffs
- Quotas
- Embargos
- Subsidies
What is a tariff?
A tariff is a tax placed on the import of certain goods into a country or trading area. Tariffs have the effect of making imported goods more expensive than home-produced goods.
What is a quota?
A quota is a limit placed on the quantity of certain goods that can be imported into a country or trading area.
What is an embargo?
An embargo is a total ban on certain goods into a country or trading area. This may be due to safety of environmental concerns.
What is a subsidy?
A subsidy is where an individual country or a trading area (e.g. the EU) gives financial support to a particular firm or industry in order to help it compete. For example, Bus Eireann, Dublin Bus and Irish Rail all get a subsidy from the Irish government, as transport is necessary for the Irish economy to run.
Calculate the balance of trade
Balance of Trade = Visible Exports – Visible Imports
Calculate the balance of payments
Balance of Payments = Total export – Total Imports
What is the global marketing mix?
When selling on foreign markets, it may be possible to use the marketing mic (the 4 P’s). However, because of difference in language, laws and customs, it is more common for a global business to use an adapted marketing mix, depending on the type of product or service they are selling. Global Marketing Mix: • Product • Place • Price • Promotion
