Unit 2-Area of Study 2-Global Economic Issues Flashcards
What are:
7 factors causing poverty in development nations?
- limited productive capacity
- low saving and investment
- population and labour force
- inefficient governments
- limited foreign trade
- inequitable income
- historical problems
Which 2 factors cause the following factor in developing nations:
Limited Productive Capacity?
- volume of land, labour and capital resources per person is low
- productivity/efficiency per person is low
What causes the following factor in developing nations:
Low saving and investment?
low efficiency → low wages → high portion of disposable income goes towards necessary goods → low levels of saving
Which 4 factors cause the following factor in developing nations:
Overpopulation and labour force?
- lack of education
- limited access to contraceptives
- high infant mortality
- economic insecurity
Which 3 factors cause the following factor in developing nations:
Inefficient governments?
- corruption
- dictatorships
- lack of power to the people
Which 4 factors causes the following factor in developing nations:
Limited foreign trade?
- limited agricultural exports because most is sustenance production
- limited manufacturing exports
- increases reliance on imports
- problems regarding overseas debt
Which 6 factors cause the following factor in developing nations:
Inequality of income?
- unequal ownership of land
- official corruption
- closed markets
- state and private monopolies
- caste system within society
- abuse of social and economic power
What are the problems caused by the following factor:
Limited productive capacity?
-restricts output of goods + services → incomes low → consumption low → living standards low
What are the problems caused by the following factor:
Low saving and investment?
-little to no income is left to invest after purchase of basic necessities → investment in capital resources which is necessary for efficient use of land and labour resources
What are the 5 problems caused by the following factor:
Overpopulation + labour force?
- overcrowded farms
- drift to city
- insufficient infrastructure
- environmental issues
- undereducated, unemployed and underemployed
What are the 2 problems caused by the following factor:
Inefficient governments?
- slows development
- corruption preventing economic and social change
What are the problems caused by the following factor:
Limited foreign trade?
-inability to export → increasing CAD → decreasing ability to pay off foreign debt → increased interest, ∴ growing debt
What are the problems caused by the following factor:
Inequality of income?
-
What are the problems caused by the following factor:
Historical problems?
- brain drain
- resource drain
Why is GDP per capita limited as an indicator in developing nations?
- unrecorded subsistence production
- problems of distribution
- negative externalities
- life quality considerations
What are:
8 Millennium Development Goals?
- end poverty + hunger
- universal education
- gender equality
- child health
- maternal health
- combat HIV/AIDs
- environmental sustainability
- global partnership
What are the 3 targets associated with the following millennium development goal:
End poverty + hunger?
- halve proportion of people whose income is less than $1 a day (PPP adjusted)
- full + productive employment and decent work for all, including woman + young people
- halve proportion of people who suffer from hunger
What is the 1 target associated with the following millennium development goal:
Universal education?
-ensure that children everywhere, boys + girls, will be able to complete a full course of primary education
What is the 1 target associated with the following millennium development goal:
Gender equality?
-eliminate gender disparity in all levels of education
What is the 1 target associated with the following millennium development goal:
Child health?
-reduce by two thirds the U5 child mortality rate
What are the 2 targets associated with the following millennium development goal:
Maternal health?
- reduce by three quarters the maternal mortality ratio
- achieve universal access to reproductive health care
What are the 3 targets associated with the following millennium development goal:
Combat HIV/AIDs?
- halt the spread, and begin to reverse the rate of HIV/AIDs infected
- achieve universal access to treatment for HIV/AIDs for all that need it
- halt spread and begun to reverse the rate of malaria + other major diseases
What are the 2 targets associated with the following millennium development goal:
Environmental sustainability?
- install principles of sustainable development programs + reverse loss of environmental resources
- halve proportion of population without access to safe drinking water + basic sanitation
What are the 5 targets associated with the following millennium development goal:
Global partnership?
- establish trading + financial systems
- special development needs of disadvantaged states
- debt sustainability
- affordable access to essential drugs
- access information + communication technologies
What are:
7 strategies to promote growth and development?
- lift investment levels
- provision of basic infrastructure
- manage debt
- reform government + promote democracy
- reduce rich countries’ trade protection
- reduce income inequality
- reduce population pressures
What are the 5 advantages of free trade?
- larger market to sell to
- lowers inflation
- increases consumer choice
- forces greater international competitiveness
- efficiency gains through specialisation and comparative advantage
What is the advantage of having a larger market?
Larger market → greater demand → creates economies of scale → more efficient production → produces more → increases AD → increases GDP → greater levels of employment and income
What are the 4 disadvantages of free trade?
- cheaper labour overseas may result in Australian jobs going overseas
- free trade will remove protection from infant industries that need it
- reliance on imports could result in shortage of essential goods if war or natural disaster etc restricted supply
- reliance on other economies results in forfeit of control of own economy meaning overseas recessions and booms hit Australia harder
What are 11 government policies which can improve competitiveness?
- lower company tax rates
- government schemes to promote exports
- more free trade areas
- cutting production costs
- improving worker efficiency
- encourage R+D
- employing technology
- lower tariffs
- reduced subsidies
- deregulation of labour market
- privatisation of government enterprise
How are Balance of Payments accounts divided?
- current transactions
- capital and financial accounts
Which 4 components comprise Current Account Balance?
- net goods
- net services
- net primary incomes
- net secondary incomes
Which 2 components comprise Capital Account Balance?
- net capital transfers
- net acquisition of non-produces non-financial items
Which 3 components comprise Financial Account Balance?
- net investments
- net reserve assets
- net errors + omissions
Provide an example of each of the 4 Current Account components
- net goods; wool, coal
- net services; education, tourism
- net primary incomes; wages paid from/to Australia to/from other countries
- net secondary incomes; taxes, pensions, gifts
What are the 3 effects of a Current Account Deficit?
- lower exchange rate
- more foreign debt
- AD may need to be slowed
What are 3 factors affecting Current Account Deficit?
- increased imports as a result of increased AD
- decreased exports
- lack of local savings
What are 3 factors affecting level of imports?
- consumer and business confidence
- tax cuts (more disposable income)
- lower interest rates (more borrowing + less saving → more spending → more imports)
What are 5 factors affecting level of exports?
- overseas recession
- appreciation of $A
- decrease in efficiency/competitiveness
- poor climatic conditions
- lack of locals investing due to lack of local savings
What is the difference between composition and direction of trade?
- composition is what is being traded
- direction is to whom trade is being conducted
Which 2 components comprise capital inflow?
- direct investment; expansion of company
- portfolio investment; buying of shares
What are 4 reasons for capital inflow within Australia?
- politically stable
- economic freedom
- natural resources
- cheaper interest rates abroad
What are 4 advantages of capital inflow?
- domestic investment increases production and efficiency
- overseas money makes up for lack of local savings
- keeps interest rates low; banks don’t raise rates to attract funds
- foreign firms theoretically pay tax to Australian governments
What are 3 disadvantages of capital inflow?
- profits, interest and dividends are paid overseas
- increases CAD; increases income debits
- Australian assets are foreignly owned and controlled
Which 2 ways can the $A appreciate?
- increase in demand
- decrease in supply
Which 2 ways can the $A depreciate?
- decrease in demand
- increase in supply
What are 6 ways demand for $A can increase?
- overseas boom
- Australian exporters becoming more competitive
- domestic investments from foreigners ↑
- anticipated rise in $A
- inflation ↓
- price of commodities ↑
What are 6 ways demand for $A can decrease?
- overseas recession
- Australian exporters becoming less competitive
- domestic investments from foreigners ↓
- anticipated fall in $A
- inflation ↑
- price of commodities ↓
What are 5 ways supply of $A can increase?
- domestic boom
- consumer and business confidence ↑
- foreign trade ↑
- anticipated fall of $A
- interest rates overseas ↑
What are 5 ways supply of $A can decrease?
- domestic recession
- consumer and business confidence ↓
- foreign trade ↓
- anticipated fall of $A
- interest rates overseas ↓
What are 3 effects of $A appreciation?
- imports become cheaper
- exports become more expensive
- inflation may fall due to cheaper goods
Which 2 components comprise foreign debt?
- public sector; government borrowing to pay for budget deficit
- private sector; companies borrowing
What are 2 advantages of foreign debt?
- debt can be productive if involved in investments and expansion
- cheaper credit than local resources
What is the disadvantage of foreign debt?
-meeting repayments
