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Economics > Unit 3 > Flashcards

Unit 3 Flashcards

1
Q

Trade

A

Importing goods from one country to another

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2
Q

Free trade

A

Trade without barriers such as tariffs

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3
Q

Advantages of trade

A

Variety of goods and services

Freetrade allows cheaper importing and exporting

Improve standards of living

Provide competition making sure firms are more efficient

Better use of resources

Firms need to produce the same quality as competing firms

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4
Q

Disadvantages of trade

A

Unemployment due to greater competition

Greater value of imports which is a leakage so national income falls

Dumping - Providing large amounts of products actually price

Local businesses cannot compete with multinationals

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5
Q

Barriers of trade

A

Tariffs – tax on imports – foreign firms to supply less at higher price

Quarta - limit on the amount of goods in a county

Embargo - ban on imports from another country

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6
Q

Reasons for trade barriers

A

To protect their own domestic industry for a foreign competition
To balance imports and exports
So local industries don’t go bankrupt
Preserve health and safety in the country

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7
Q

Why does the UK trade so much with the EU and the USA

A

EU is close to the UK so transport cost of exporting goods are low

Countries in the EU have free trade

Consumers in the EU and USA demand the goods from the UK

USA and UK have shared culture, so long history of trade

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8
Q

UK main exports

A 
Petroleum oils
Cars
Alcohol
Banking
Medicaments
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9
Q

Current account

A

Is the U.K.’s largest trade in deficit

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10
Q

Investment income

A

Measure of the return that investors get from their assets

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11
Q

Current transfers

A

The money that the government give an aid or payments to and from international organisations such as the EU

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12
Q

Trade deficit

A

When the uk imports more than exports

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13
Q

Trade surplus

A

When the uk exports more than imports

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14
Q

Exchange rate

A

The price of one currency in terms of another

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15
Q

Appreciation

A

Strengthening of the exchange rate which means 1 pound buys more foreign currency

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16
Q

Consequences of appreciation

A

Goods in other countries are cheaper therefore it is cheaper to import from abroad

UK goods are dearer for foreign countries therefore less demand for UK exports

17
Q

Depreciation

A

We can aim of the exchange rate means 1 pound and buy less with a foreign

18
Q

Consequences of depreciation

A

Goods in other countries are no do you are UK citizens will be able to buy less goods from abroad imports full

UK exports are no cheaper greater demand for exports

19
Q

Determinants of demand for currency

A

Fall in exports cause demand for UK pounds full

Tourism increases then demand for pound increase

Investors put large sums of money in banks with high interest rates this increases demand for a pound

Low inflation rate cause investors to hold there’s assets as they get more real return

Increase in pound means firms get higher profit

20
Q

Determinants of supply for a currency

A

UK citizens buy products from foreign countries, they sell UK pound on foreign exchange markets

UK citizens go on holiday they exchange the pound for foreign currency

High inflation increases the supply of the UK pound

21
Q

Impact of changes in exchange rates on individuals and firms

A

Individuals
Cheaper to import goods from abroad
G Portugal abroad on holiday

Firms
Demand for exports wilful
For the cost of production

22
Q

European Union

A

Collection of 28 European countries

23
Q

Single market

A

No barriers to trade between EU countries

24
Q

Freedom of movement

A

Labour is free to move around the EU to find work

25
Q

Advantages and disadvantages of the UK being part of the EU

A 
Advantages
And restricted movement of goods and services and labour among countries
Greater choice for consumers
More competition encourages efficiency
Increasing standards
Big market to increase volume of trade
Employment opportunities
Disadvantages
Competition for UK firms
Lower wage economies
Migration issues
Contributions EU budget
Eurozone crisis
26
Q

Eurozone

A

Collection of 19 countries who use the USA currency

27
Q

Advantages and disadvantages of the

Eurozone

A

Advantages
Stable exchange rates reduce risks of trade and increases volume of trade
No transaction costs lead to more investments

Disadvantages
UK no longer determines its interest rates
High menu costs e.g. vending machines

28
Q

Developing countries

A

Countries which are less developed and newly industrialised

29
Q

Newly industrialised countries

A

Brazil
Russia
India
China

Mexico
Indonesia
Nigeria
Turkey

30
Q

Characteristics of less-developed economies

A 
High rates of unemployment
Poorly educated labour
Lack of capital investments
Poor infrastructure e.g. roads
Political instability
Lack of foreign investments
31
Q

Strategies to increase economic growth

A

Third aid – providing food for underdeveloped countries this because food prices to full and local farmers incomes to full

Educational support e.g. improve quality of education and training of teachers

Soft loan - loan with low interest rates so countries can use efficiently and get more return

Woman working

32
Q

Multinationals

A

Enterprise or corporation that operates in many different countries

33
Q

Why do you multinationals invest in developing countries

A

Cheap labour costs
Cheaper land
Large population market
Closer to raw materials

34
Q

Disadvantages of multinationals locating in developing

A

Bankrupt local goods and services
Erosion of natural resources
Pollutions
Top jobs don’t go to locals

35
Q

Emerging economies

A

Faster growing and developing countries

36
Q

Characteristics of emerging economies

A

Mass production of low end products
Invest large sums into education and training improving labour
Value of GDP is higher than developed economies
Afford large investments in large capital project

37
Q

Risks of UK firms investing in emerging economies

A

Jobs in UK may be lost
Goods are were made in the UK and are made in emerging countries
Firms abroad will not pay UK corporation tax

Economics (10 decks)

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