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GCSE Economics > Unit 3 > Flashcards

Unit 3 Flashcards

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1
Q

Globalisation

A

An expansion of world trade in goods and services leading to greater international interdependence

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2
Q

What are the stages of globalisation?

A

Stage one - began around 1870
Stage two - began after 1945
Stage three - where we are now

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3
Q

Stage one of globalisation

A

New technologies helped improve transport and so reduce the costs of moving goods between countries. Ended in 1920s when countries started protectionism

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4
Q

Stage two of globalisation

A

Countries were keen to rebuild their economies after WW2, which led to a rapid expansion in world trade

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5
Q

Stage three of globalisation

A

Characterised by a huge increase in trade and capital flows between countries, and the mass production of goods by huge companies to gain economies of scale

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6
Q

What are the causes of globalisation?

A

Improvements in transportation
Improvements in ICT
Rising real living standards
Decline in protection
Economies of scale

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7
Q

How do improvements in transportation cause globalisation?

A

The costs of moving goods from one country to another have been reduced due to new technologies and competition

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8
Q

How do improvements in ICT cause globalisation?

A

Internet technology has made sending and communicating information very quick and very cheap

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9
Q

How do rising real living standards cause globalisation?

A

As countries become richer, their citizens demand not only more goods, but also a wider choice of products

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10
Q

How does a decline in protection cause globalisation?

A

More countries encourage trade, so there are fewer barriers to trading

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11
Q

How do economies of scale cause globalisation?

A

Technological improvements often mean that companies have to mass produce and sell to large markets, which may force them to look overseas

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12
Q

Multinational company

A

A company that has operations all over the world

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13
Q

Advantages of an MNC

A

Cheaper labour costs
A favourable tax environment
Availability of government grants

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14
Q

Disadvantages of an MNC

A

Loss of jobs
Export of technology
Dependency on imports
Loss of tax revenues

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15
Q

Absolute advantage

A

When a country is able to provide a good or service using fewer resources and at lower costs than another country

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16
Q

International trade

A

The exchange of goods and services across international boundaries

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17
Q

Benefits of international trade

A

Increases the choice for consumers
Allows firms to gain economies of scale
Increases competition, preventing monopolies
Allows individuals and firms to obtain goods that are not available in their country

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18
Q

Costs of international trade

A

Negative externalities

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19
Q

What are the main negative externalities?

A

Pollution from ‘dirty’ industries
Transport of the finished goods or parts
Air miles

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20
Q

Free trade

A

An absence of tariffs, quotas and regulations designed to reduce or prevent trade among nations

21
Q

Benefits of free trade

A

Increases world output and wealth
Encourages efficiency in the use of resources
Increased competition encourages firms to produce new products

22
Q

World Trade Organisation

A

Responsible for trying to increase free trade, which is advanced through a series of negotiations called ‘rounds’

23
Q

What is the WTO responsible for?

A

The Uruguay Round:
Cuts in tariffs of around 40%
Extension of intellectual property rights
Cuts in agricultural subsidies allowing greater access to American and EU markets
An agreement to allow full access for textiles and clothing from developing countries

24
Q

Protection

A

Where an action is taken that reduces international trade

25
Q

Methods of protection

A

Tariff
Quota
Embargo
Regulations

26
Q

Tariff

A

A tax placed on imports to increase the price and reduce the quantity demanded

27
Q

Reasons for protection

A

Infant industry
Dumping
Protect jobs
Prevent negative externalities
Political

28
Q

Dumping

A

Firms or countries may try to undercut producers by selling below the cost of production, to drive out competition, gain market share, then raise the price to get high profits

29
Q

Quota

A

This is a physical limit on the number of goods imported into a country

30
Q

Embargo

A

This is a ban on the import of a good or service

31
Q

Regulations

A

Many countries try to limit imports through a variety of rules

32
Q

Single market

A

The economies of different countries can be treated as one when a firm is considering its domestic market

33
Q

The single market means:

A

Free movement of people
Elimination of border control
Mutual recognition of qualifications

34
Q

Advantages of the single market

A

Competition
Free movement of labour
Specialisation and economies of scale
Higher economic growth and standards of living

35
Q

Disadvantages of the single market

A

Job losses
Attract capital and jobs away
​Multinational firms drive out local firms

36
Q

Customs Union

A

A group of countries that have free trade between members, but a common external barrier

37
Q

Advantages of a single currency

A

Price transparency
Transaction costs
Single monetary policy

38
Q

Current account

A

The balance of trade in goods and services plus net investment income from overseas assets

39
Q

Reasons for a balance of payments deficit

A

Loss of advantage in many industries
Relatively weak product innovation
Growth in people’s real income

40
Q

Exchange rate

A

How much of one currency needs to be given up to buy one unit of another currency

41
Q

Floating exchange rate

A

Where the prices of two currencies are decided by market forces

42
Q

Fixed exchange rate

A

Where the central bank of a country tries to decide on the price of a currency

43
Q

International competitiveness

A

The ability of domestic companies to compete with foreign companies

44
Q

Foreign direct investment

A

The investment by foreign companies in the production of goods and services in another country

45
Q

Benefits of globalisation to the UK

A

High levels of FDI
Reduction in shortages of skilled labour due to immigration
Rising productivity from foreign firms setting up in the UK and innovating

46
Q

Absolute poverty

A

Where someone has insufficient income to live on. Usually defined as having less than $1.25 a day to live on.

47
Q

Costs of globalisation to the UK

A

Loss of jobs and manufacturing industry due to high costs
The UK is open to risks outside the control of the government
Environmental problems are caused by the growth of air and sea transport
Harder for smaller businesses to establish themselves due to increased competition

48
Q

Non-government organisations (NGOs)

A

Organisations that have specific purposes, and thus are very focused on particlar problems

GCSE Economics (3 decks)

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