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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
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
26
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
27
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
28
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
29
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
30
How are Balance of Payments accounts divided?
- current transactions | - capital and financial accounts
31
Which 4 components comprise Current Account Balance?
- net goods - net services - net primary incomes - net secondary incomes
32
Which 2 components comprise Capital Account Balance?
- net capital transfers | - net acquisition of non-produces non-financial items
33
Which 3 components comprise Financial Account Balance?
- net investments - net reserve assets - net errors + omissions
34
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
35
What are the 3 effects of a Current Account Deficit?
- lower exchange rate - more foreign debt - AD may need to be slowed
36
What are 3 factors affecting Current Account Deficit?
- increased imports as a result of increased AD - decreased exports - lack of local savings
37
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)
38
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
39
What is the difference between composition and direction of trade?
- composition is what is being traded | - direction is to whom trade is being conducted
40
Which 2 components comprise capital inflow?
- direct investment; expansion of company | - portfolio investment; buying of shares
41
What are 4 reasons for capital inflow within Australia?
- politically stable - economic freedom - natural resources - cheaper interest rates abroad
42
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
43
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
44
Which 2 ways can the $A appreciate?
- increase in demand | - decrease in supply
45
Which 2 ways can the $A depreciate?
- decrease in demand | - increase in supply
46
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 ↑
47
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 ↓
48
What are 5 ways supply of $A can increase?
- domestic boom - consumer and business confidence ↑ - foreign trade ↑ - anticipated fall of $A - interest rates overseas ↑
49
What are 5 ways supply of $A can decrease?
- domestic recession - consumer and business confidence ↓ - foreign trade ↓ - anticipated fall of $A - interest rates overseas ↓
50
What are 3 effects of $A appreciation?
- imports become cheaper - exports become more expensive - inflation may fall due to cheaper goods
51
Which 2 components comprise foreign debt?
- public sector; government borrowing to pay for budget deficit - private sector; companies borrowing
52
What are 2 advantages of foreign debt?
- debt can be productive if involved in investments and expansion - cheaper credit than local resources
53
What is the disadvantage of foreign debt?
-meeting repayments

ECO-1/2 (8 decks)

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