Unit 4 - International Trade And The Global Economy

Question 1

Reasons for international trade

Answer 1

Improve political relationships
Increase output
To obtain goods other countries specialise in
Fewer scarce resources are used globally

Question 2

The EU

Answer 2

An economic and political group of countries in Europe that trades freely with one another

Question 3

Features of EU membership

Answer 3

Free trade
Common laws
Common tariffs with non EU members
Free movement of people

Question 4

Current account

Answer 4

The record of trade in goods and services, income flows (earnings on investments) and transfers (Of payments not trade)

Question 5

Balance of payments on current account

Answer 5

The total of net trade in goods and services, income flows and transfers between one country and the rest of the world

Question 6

Reasons for widening UK BOP net amount

Answer 6

Product deficit increasing
More imports of products such oil and gas
Falling exports to the EU as some economies slowdown

Question 7

Costs of a deficit

Answer 7

May reflect falling demand for domestic goods

Increases the debt of a country

Question 8

Positives of a deficit

Answer 8

May reduce inflation
Overtime may lead to depreciation of the £
May only be a small % of GDP

Question 9

Positives of a surplus

Answer 9

May reflect rising demand for domestic goods

May decrease the country’s debt

Question 10

Costs of a surplus

Answer 10

May lead to rising inflation
May lead to appreciation of the £
Could be a result of protectionist policies

Question 11

Causes of a surplus

Answer 11

High quality/low price goods
Weak £
Lack of domestic growth (businesses therefore focus internationally)
A minus net flow of investment

Question 12

Causes of a deficit

Answer 12

Poor quality/expensive goods
Strong £
A positive net flow of investment
Falling incomes overseas

Question 13

Factors affecting demand for £

Answer 13

UK goods become more desirable
Incomes rise in other economies
UK becomes more desirable for foreign investment
Higher UK interest rates

Question 14

Factors affecting supply of the £

Answer 14

Higher overseas interest rates
Products in overseas markets become more attractive
Higher UK incomes
Overseas market s become more attractive for British investors

Question 15

Impacts of weakening/strengthening £

Answer 15

Inflation effects
Deficit/surplus effects
More/less holidays 
More/less demand of goods (PED dependant) 
Employment/unemployment

Question 16

Development

Answer 16

The process of increasing people’s standard of living and wellbeing over time

Question 17

Development measures

Answer 17

GDP per capita
Access to education 
Access to healthcare
Access to technology 
Life expectancy

Question 18

Developed country

Answer 18

A country with high GDP per capita, strong indicators of wellbeing and developed industries

Question 19

Developing country

Answer 19

A country with lower GDP per capita, weaker indicators of wellbeing and lower levels of industrialisation.

Question 20

Costs of globalisation for developed economies stakeholders

Answer 20

Producer - Vulnerability to worldwide changes
Workers - Immigration (Competition for jobs)
Consumer - Less choice due to presence of global brands/volatility of prices

Question 21

Costs of globalisation for developing economies stakeholders

Answer 21

Producers - Difficult to compete in some industries again MNCs
Consumers - Rising prices i.e. national food products
Workers - Dependence on world markets