U3 Overview of the World Economy

Question 1

Bretton Woods system

Answer 1

• 1946
• an international economic structure to prevent further depressions and wars
• includes institutions/rules intended to prevent national trade barriers
• lack of free trade was considered by many to have been a principal cause of war

Question 2

European Coal and Steel Community (ECSC)

Answer 2

• 1951
• the first international organisation to be based on the principles of supranationalism.

Question 3

Post War 2

Answer 3

• Japan, Germany, and Europe were in ruins while the US thrived.
• US funded their reconstruction through loans like the Marshall Plan, helping create democratic economies.
• This expansion of economies opened new markets for American goods and services.
• The US established military bases worldwide, securing its influence in trade routes and regional economies.

Question 4

Independence

Answer 4

Over the next 20-30 years following WWII, many former colonies across the world, including in Africa, declared independence from Britain and France

Question 5

Growth and development

Answer 5

• World trade began to increase
• trade barriers/ tariffs began to disappear
• technology allowing for improved shipping

Question 6

International Aid/loans

Answer 6

During the 1960’s, many African countries looked to develop their countries through large and cheap loans provided by banks International and American banks. Improvement in the quality of life and national economies increased

Question 7

Organization of the Petroleum Exporting Countries
(OPEC)

Answer 7

• Saudi Arabia and other major oil producers have control over the price of oil and their profits.
• After the Yom Kippur War, they announced control over the oil price, leading to reduced oil supply and higher petrol costs.
• OPEC nations invested their money in Western banks, which then lent it to developing countries.

Question 8

Interest Rates/debts history

Answer 8

• 1980’s: Inflation rose in the US and UK.
• Reagan and Thatcher raised interest rates to control inflation.
• Interest rates reached 21%, making it difficult for people to get loans.
• Developing nations faced significant loan repayments due to the high rates.
• Some countries are still recovering from the consequences of the high interest rates.

Question 9

China

Answer 9

• Mid-1980’s: implements economic reforms, combining political communism with a capitalist economy.
• experiences decades of 10% economic growth, transforming into a global power and major producer of goods.
• growing influence in the Pacific region draws attention from the US, Japan, and neighboring countries.

Question 10

Fall of the Soviet Union

Answer 10

• Berlin Wall fell in 1989
• the collapse of the Soviet Union not long after in 1991
• capitalism and democracy were declared the ‘winner’ of how people would best like to run their countries and lives.
• Russia, at the centre of the USSR, has regained some of its power, wealth and aggressiveness
• Russia’s cooperation with the West is currently unpredictable.

Question 11

Stimulus & Debt in the ‘West’

Answer 11

• Nations lower interest rates and use government spending to stimulate the economy after recessions.
• This prevents depressions but leads to significant government debt.
• The outcomes and advantages/disadvantages of this trend are yet to be determined.

Question 12

demographics

Answer 12

• the study of a population
• based on age, race, sex, economic status, level of education, income level and employment, among others
• used by governments, corporations and non-government organizations to learn more about a population’s characteristics for many purposes, including policy development and economic market research

Question 13

wealth

Answer 13

• indicates the amount of money a demographic cohort could spend on a product or service
• measured by income, savings and other assets

Question 14

Culture & Traditions & Language

Answer 14

• Marketers will learn about the language, traditions and cultures of the countries that they are hoping to market to
• Importers must be confident that a potential new product that is to be introduced to a country, will be accepted and can be sold this new population, based on their marketing research

Question 15

Free Trade

Answer 15

Free trade expands worldwide through trade deals and reduced tariffs.