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ECO-1/2 > Unit 2-Area of Study 2-Global Economic Issues > Flashcards

Unit 2-Area of Study 2-Global Economic Issues Flashcards

1
Q

What are:

7 factors causing poverty in development nations?

A
  • limited productive capacity
  • low saving and investment
  • population and labour force
  • inefficient governments
  • limited foreign trade
  • inequitable income
  • historical problems
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2
Q

Which 2 factors cause the following factor in developing nations:
Limited Productive Capacity?

A
  • volume of land, labour and capital resources per person is low
  • productivity/efficiency per person is low
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3
Q

What causes the following factor in developing nations:

Low saving and investment?

A

low efficiency → low wages → high portion of disposable income goes towards necessary goods → low levels of saving

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4
Q

Which 4 factors cause the following factor in developing nations:
Overpopulation and labour force?

A
  • lack of education
  • limited access to contraceptives
  • high infant mortality
  • economic insecurity
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5
Q

Which 3 factors cause the following factor in developing nations:
Inefficient governments?

A
  • corruption
  • dictatorships
  • lack of power to the people
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6
Q

Which 4 factors causes the following factor in developing nations:
Limited foreign trade?

A
  • limited agricultural exports because most is sustenance production
  • limited manufacturing exports
  • increases reliance on imports
  • problems regarding overseas debt
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7
Q

Which 6 factors cause the following factor in developing nations:
Inequality of income?

A
  • unequal ownership of land
  • official corruption
  • closed markets
  • state and private monopolies
  • caste system within society
  • abuse of social and economic power
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8
Q

What are the problems caused by the following factor:

Limited productive capacity?

A

-restricts output of goods + services → incomes low → consumption low → living standards low

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9
Q

What are the problems caused by the following factor:

Low saving and investment?

A

-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

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10
Q

What are the 5 problems caused by the following factor:

Overpopulation + labour force?

A
  • overcrowded farms
  • drift to city
  • insufficient infrastructure
  • environmental issues
  • undereducated, unemployed and underemployed
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11
Q

What are the 2 problems caused by the following factor:

Inefficient governments?

A
  • slows development

- corruption preventing economic and social change

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12
Q

What are the problems caused by the following factor:

Limited foreign trade?

A

-inability to export → increasing CAD → decreasing ability to pay off foreign debt → increased interest, ∴ growing debt

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13
Q

What are the problems caused by the following factor:

Inequality of income?

A

-

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14
Q

What are the problems caused by the following factor:

Historical problems?

A
  • brain drain

- resource drain

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15
Q

Why is GDP per capita limited as an indicator in developing nations?

A
  • unrecorded subsistence production
  • problems of distribution
  • negative externalities
  • life quality considerations
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16
Q

What are:

8 Millennium Development Goals?

A
  • end poverty + hunger
  • universal education
  • gender equality
  • child health
  • maternal health
  • combat HIV/AIDs
  • environmental sustainability
  • global partnership
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17
Q

What are the 3 targets associated with the following millennium development goal:
End poverty + hunger?

A
  • 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
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18
Q

What is the 1 target associated with the following millennium development goal:
Universal education?

A

-ensure that children everywhere, boys + girls, will be able to complete a full course of primary education

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19
Q

What is the 1 target associated with the following millennium development goal:
Gender equality?

A

-eliminate gender disparity in all levels of education

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20
Q

What is the 1 target associated with the following millennium development goal:
Child health?

A

-reduce by two thirds the U5 child mortality rate

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21
Q

What are the 2 targets associated with the following millennium development goal:
Maternal health?

A
  • reduce by three quarters the maternal mortality ratio

- achieve universal access to reproductive health care

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22
Q

What are the 3 targets associated with the following millennium development goal:
Combat HIV/AIDs?

A
  • 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
23
Q

What are the 2 targets associated with the following millennium development goal:
Environmental sustainability?

A
  • install principles of sustainable development programs + reverse loss of environmental resources
  • halve proportion of population without access to safe drinking water + basic sanitation
24
Q

What are the 5 targets associated with the following millennium development goal:
Global partnership?

A
  • establish trading + financial systems
  • special development needs of disadvantaged states
  • debt sustainability
  • affordable access to essential drugs
  • access information + communication technologies
25
Q

What are:

7 strategies to promote growth and development?

A
  • lift investment levels
  • provision of basic infrastructure
  • manage debt
  • reform government + promote democracy
  • reduce rich countries’ trade protection
  • reduce income inequality
  • reduce population pressures
26
Q

What are the 5 advantages of free trade?

A
  • larger market to sell to
  • lowers inflation
  • increases consumer choice
  • forces greater international competitiveness
  • efficiency gains through specialisation and comparative advantage
27
Q

What is the advantage of having a larger market?

A

Larger market → greater demand → creates economies of scale → more efficient production → produces more → increases AD → increases GDP → greater levels of employment and income

28
Q

What are the 4 disadvantages of free trade?

A
  • 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
29
Q

What are 11 government policies which can improve competitiveness?

A
  • 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
30
Q

How are Balance of Payments accounts divided?

A
  • current transactions

- capital and financial accounts

31
Q

Which 4 components comprise Current Account Balance?

A
  • net goods
  • net services
  • net primary incomes
  • net secondary incomes
32
Q

Which 2 components comprise Capital Account Balance?

A
  • net capital transfers

- net acquisition of non-produces non-financial items

33
Q

Which 3 components comprise Financial Account Balance?

A
  • net investments
  • net reserve assets
  • net errors + omissions
34
Q

Provide an example of each of the 4 Current Account components

A
  • 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
35
Q

What are the 3 effects of a Current Account Deficit?

A
  • lower exchange rate
  • more foreign debt
  • AD may need to be slowed
36
Q

What are 3 factors affecting Current Account Deficit?

A
  • increased imports as a result of increased AD
  • decreased exports
  • lack of local savings
37
Q

What are 3 factors affecting level of imports?

A
  • consumer and business confidence
  • tax cuts (more disposable income)
  • lower interest rates (more borrowing + less saving → more spending → more imports)
38
Q

What are 5 factors affecting level of exports?

A
  • overseas recession
  • appreciation of $A
  • decrease in efficiency/competitiveness
  • poor climatic conditions
  • lack of locals investing due to lack of local savings
39
Q

What is the difference between composition and direction of trade?

A
  • composition is what is being traded

- direction is to whom trade is being conducted

40
Q

Which 2 components comprise capital inflow?

A
  • direct investment; expansion of company

- portfolio investment; buying of shares

41
Q

What are 4 reasons for capital inflow within Australia?

A
  • politically stable
  • economic freedom
  • natural resources
  • cheaper interest rates abroad
42
Q

What are 4 advantages of capital inflow?

A
  • 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
43
Q

What are 3 disadvantages of capital inflow?

A
  • profits, interest and dividends are paid overseas
  • increases CAD; increases income debits
  • Australian assets are foreignly owned and controlled
44
Q

Which 2 ways can the $A appreciate?

A
  • increase in demand

- decrease in supply

45
Q

Which 2 ways can the $A depreciate?

A
  • decrease in demand

- increase in supply

46
Q

What are 6 ways demand for $A can increase?

A
  • overseas boom
  • Australian exporters becoming more competitive
  • domestic investments from foreigners ↑
  • anticipated rise in $A
  • inflation ↓
  • price of commodities ↑
47
Q

What are 6 ways demand for $A can decrease?

A
  • overseas recession
  • Australian exporters becoming less competitive
  • domestic investments from foreigners ↓
  • anticipated fall in $A
  • inflation ↑
  • price of commodities ↓
48
Q

What are 5 ways supply of $A can increase?

A
  • domestic boom
  • consumer and business confidence ↑
  • foreign trade ↑
  • anticipated fall of $A
  • interest rates overseas ↑
49
Q

What are 5 ways supply of $A can decrease?

A
  • domestic recession
  • consumer and business confidence ↓
  • foreign trade ↓
  • anticipated fall of $A
  • interest rates overseas ↓
50
Q

What are 3 effects of $A appreciation?

A
  • imports become cheaper
  • exports become more expensive
  • inflation may fall due to cheaper goods
51
Q

Which 2 components comprise foreign debt?

A
  • public sector; government borrowing to pay for budget deficit
  • private sector; companies borrowing
52
Q

What are 2 advantages of foreign debt?

A
  • debt can be productive if involved in investments and expansion
  • cheaper credit than local resources
53
Q

What is the disadvantage of foreign debt?

A

-meeting repayments

ECO-1/2 (8 decks)

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