Topic 4

Question 1

Reasons for international trade

Answer 1

Improve political relationships
Increase output
To obtain goods other countries specialise in
Fewer scarce resources are used globally

Question 2

The EU

Answer 2

An economic and political group of countries in Europe that trades freely with one another

Question 3

Features of EU membership

Answer 3

Free trade
Common laws
Common tariffs with non EU members
Free movement of people

Question 4

Current account

Answer 4

The record of trade in goods and services, income flows (earnings on investments) and transfers (Of payments not trade) between one country and the rest of the world.

Question 5

Balance of payments on current account

Answer 5

The total of net trade in goods and services, income flows and transfers between one country and the rest of the world

Question 6

Reasons for widening UK BOP net amount

Answer 6

Product deficit increasing
More imports of products such oil and gas
Falling exports to the EU as some economies slowdown

Question 7

Costs of a deficit

Answer 7

May reflect falling demand for domestic goods

Increases the debt of a country

Question 8

Positives of a deficit

Answer 8

May reduce inflation
Overtime may lead to depreciation of the £
May only be a small % of GDP

Question 9

Positives of a surplus

Answer 9

May reflect rising demand for domestic goods

May decrease the country’s debt

Question 10

Costs of a surplus

Answer 10

May lead to rising inflation
May lead to appreciation of the £
Could be a result of protectionist policies e.g tariffs

Question 11

Causes of a surplus

Answer 11

High quality/low price goods
Weak £
Lack of domestic growth (businesses therefore focus internationally)
A net inflow of investment

Question 12

Causes of a deficit

Answer 12

Poor quality/expensive goods
Strong £
A net outflow of investment
Falling incomes overseas

Question 13

Factors affecting demand for £

Answer 13

UK goods become more desirable
Incomes rise in other economies
UK becomes more desirable for foreign investment - speculation the pound may get stronger
Higher UK interest rates

Question 14

Factors affecting supply of the £

Answer 14

Higher overseas interest rates
Products in overseas markets become more attractive
Higher UK incomes
Overseas market s become more attractive for British investors
IIAA

Question 15

Impacts of weakening/strengthening £

Answer 15

Inflation effects
Deficit/surplus effects
More/less holidays
More/less demand of goods (PED dependant)
Employment/unemployment

Question 16

Development

Answer 16

The process of increasing people’s standard of living and wellbeing over time

Question 17

Development measures

Answer 17

GDP per capita
Access to education
Access to healthcare
Access to technology
Life expectancy

Question 18

Developed country

Answer 18

A country with high GDP per capita and developed industries and service sectors.

Question 19

Developing country

Answer 19

A country with lower GDP per capita, weaker indicators of wellbeing and lower levels of industrialisation.

Question 20

Costs of globalisation for producers in developed countries

Answer 20

• Vulnerability to worldwide changes (dependent on global income)
• A possible decline in industry (from more competition in less developed countries)

Question 21

Benefits of globalisation for producers in developed countries

Answer 21

• Wider market to sell to (more revenue)
• Cheaper and wider supply of resources
• Advances in technology (sharing scientific research)
• A cheaper and more skilled workforce

Question 22

Costs of globalisation for workers in developed countries

Answer 22

● Decline of industry and unemployment
● An increase in the use of machinery and unemployment
● An increase in dependence on world markets and
unemployment
● An increase in immigration and unemployment from increased skill and price competition from migrants

Question 23

Benefits of globalisation for workers in developed/developing countries

Answer 23

● Increased employment due to increased output
● Increased employment due to increased investment
● Increased geographical mobility (workers can live and work abroad)

Question 24

Costs of globalisation for consumers in developed countries

Answer 24

● Less choice due to global brands - loss of smaller brands
● Volatility and rising prices - from fluctuating prices and more competition from consumers

Question 25

Benefits of globalisation for consumers in developed countries

Answer 25

● A wider range of goods
● Lower prices for goods
● Better-quality and more innovative goods
● Greater opportunity to travel - more holidays
● Improved services due to more skilled professionals

Question 26

Costs of globalisation for producers in developing countries

Answer 26

● Vulnerability to problems in the worldwide economy
● Increased migration and loss of skilled workers
● Smaller, developing industries may not be able to compete

Question 27

Benefits of globalisation for producers in developing countries

Answer 27

● Wider markets to sell into
● Advances in technology
● Increased foreign investment

Question 28

Costs of globalisation for workers in developing countries

Answer 28

● Increased use of machinery and unemployment
● Increased vulnerability and unemployment - dependence on global income
● Increased gap between rich and poor
● Poor working conditions

Question 29

Costs of globalisation for consumers in developing countries

Answer 29

● Rising prices (from more consumers buying the same goods)
● Poor quality of services due to migration

Question 30

Benefits of globalisation for consumers in developing countries

Answer 30

● Wider range of goods
● Access to global brands
● Greater opportunity to travel
● Better infrastructure due to foreign investment