Economics everything in Nat 5

Define global trade

the import and export of goods and services across international boundaries

Name some benefits of trade

Greater choice and variety as not all countries produce the same goods Lower prices because some countries can produce goods cheaper than others can Augments home supplies

Same some disadvantages of global trade

Resource depletion and climate change Unemployment due to competition from abroad Increases the gap between rich and poor Harmful goods can enter a country Loss of strategic industries Smaller firms can't compete with larger, global firms

Name some barriers to trade

A tariff, quota, high safety/quality standards and an embargo

What is a tariff

A tax placed on imported goods

What is a quota

A limit on the amount of a certain good allowed to enter the country

What is an embargo

A complete ban on certain goods (or goods from a particular country)

Name some reasons for introducing trade barriers

To protect infant industries so that they do not face competition To raise revenue so that the governmentTo protect domestic jobs so that the government JSA payments do not increase To protect strategic industries so home countries do not have to rely on foreign suppliers who may not be able to transport supplies To prevent harmful products being sold so that domestic consumers are protected To reduce imports so that the balance of trade deficit will improve

What's the definition of a multinational

A company that operates in more than one country. A company that has an HQ in one country and production facilities in others A multinational company is one where branches or production facilities are located worldwide

Name some reasons for becoming a MNE

To reduce production costs To reduce transport costs To penetrate markets protected by import controls To take advantage of host government financial assistance To escape government regulation at home To earn higher profits after tax.

What are some reasons for an MNE locating in the UK

skilled labour force low wage rates relative to some other areas of the EU inside the EU tariff barrier good infrastructure financial inducements from central and local government external economies of scale (particularly for electronics), e.g. a concentration of local suppliers and services. good education

What are some advantages for host country of an MNE

Employment Incoming firms come with advanced technical and management skills wide choice of products

What are some disadvantages for host country of an MNE

Research and development may take place in country of origin. bad working conditions, only gets low skilled jobs, exploits country, no investment in instrastructure

Name some effects on the home country (MNE)

Jobs lost overseas with a negative multiplier effect, deindustrialisation (dont produce stuff anymore), exports fall

What is an exchange rate?

the price of one currency in terms of another

What are some factors affecting the value of the pound

Foreigners wanting to buy UK goods and services UK citizens wanting to buy foreign goods and services Foreigners wanting to invest in the UK UK citizens wanting to invest abroad Foreign governments wanting to hold pounds as a reserve UK central banking wanting to hold foreign currency as a reserve

What are some characteristics of developing economics

General poverty, low gdp, low standard of living, limited exports, only exports primary products, low level of gov spending, low standard in education, low productivity, lack of capital

Name some developing economies

Mali Niger Malawi Mozambique Uganda Somalia Yemen Nepal Afghanistan Senegal Sudan

What is a loan in aid

Cash on which Interest is charged

What is debt relief in aid

When rich countries write off the debts that developing countries owe them

What is technical aid

When experts go to help workers learn how to operate machinery, equipment etc

What is capital equipment in aid

Provides machinery

What is tied aid

When a country provides money but the recipient has to spend it on goods from the donor country

What is bilateral aid?

When one country directly transfers money or assets to another country

What is food/emergency aid

Provides food/shelter etc usually when a natural disaster occurs

What is charitable aid

Donations from citizens in other countries

What is military aid

Provides equipment and personel

What are some emerging economies

Turkey India Mexico Brazil South Africa Thailand Malaysia China

What are some characteristics of emerging economies

Rapid increase in economic growth Improving standard of living Moving from primary to secondary industry Large export markers for manufactured goods Have large investments in capital Have invested in training and education Improving infrastructure

What are some advantages of emerging markets for UK

Source of cheap labour and resources for UK firms UK firms can send profits back to UK

What are some disadvantages of emerging markets to the UK

Greater unemployment as UK firms leave to set up in emerging markets Imports increase due to cheaper goods being made available

Pound appreciation- pound becomes stronger

£1 buys u more foreign stuff- purchasing power of uk ppl abroad increases Foreign currency buys less uk stuff Purchasing power of foreigners in uk falls

Pound depreciation- becomes weaker

£1 buys u less of foreign styffm purchasing power abroad falls,

Impact or pound appreciation in exchange rates of the price of imports and exports

Uk exports more expensive for foreigners - value of exports fall Imports from other countries to uk is less expensive- value of imports rise Current account deficit increases

Impact or pound depreciation in exchange rates of the price of imports and exports

Uk exports become cheap for foreigners- value of exports rise Imports more expensive for uk- imports value fall Current account deficit decreases

Impact or pound appreciation in exchange rates on individuals and firms

Greater purchasing power in foreign countries, foreigners have less purchasing power, exporters will get less demand\= less revenue\= less workers Importerrs lower costs \=lower prices

Impact or pound depreciation in exchange rates on individuals and firms

Less purchasing power abroad for uk, foreigners have more purchasing power, exporters will get more demand\= more revenue Importers have higher costs\= increase prices

what is production

using the Factors of production to produce goods/services

What is productivity?

amount of output per unit of input

what is automation

this means it is where labour is replaced with capital

what are advantages to automation

Machines do not get bored or tired, Machines will make less mistakes

Disadvantages to automation

They have to be maintained by specialist engineers. Their wages will be `high., can’t do all human jobs`

what are the types of taxation

income tax, national insurance, VAT

what is income tax

this comes directly off wages & support national governments savings

what is national insurance

comes directly off wages and is spread on benefits

what is VAT ( Value Added Tax)

payed at point of purchase of goods/services

What are the sectors of industry?

primary, secondary, tertiary

what is the primary sector of the industry

Extraction of raw materials or growing of food(ie. Farmers, oil extractors, mining, timber)

what is the secondary sector of the industry

manufacturing and processing of raw materials (ie. House building, car factories)

what is the tertiary sector of the industry

Providing services done by people such as Hairdressing, super markets, lawyers

What is specialization?

this is when production is split up into different jobs(division of labour) this improves productivity

what are the advantages of specialisation

workers become experts in one job, makes product cheaper because it gets produced more, easier to train&monitor workers in single jobs

What are the disadvantaged specialisation

risk of unemployment, production depends on many different people/workers, loss of handmade element,

Occupational mobility of labour

The ability to change careers by changing skills

Occupational mobility of resources

The ability of a resource to change use

Factors of production

Capital, Enterprise, Land, Labour

What is capital

Any human-made resource that is used to create other goods and services.

What is enterprise

a for-profit business started and run by an entrepreneur

What is labour

This is the mental and physical effort used in production

What is land

natural resources used to produce goods and services

Geographical mobility of resources

The ability of a resource to move place to place

Geographical immobility of resources

The inability of a resource to move place to place

Why does geographical immobility exist? Fam-

Family and social ties

Why does geographical immobility exist? Fin-

Financial costs

Why does geographical immobility exist? Short-

Shortage of affordable housing

Why does geographical immobility exist? It co-

It costs more in different places

Why does geographical immobility exist? Cultur-

Cultural and language barriers

Why does geographical immobility exist? Mig-

Migration control

Opportunity cost

the sacrifice of the next best alternative

r. If someone cannot easily move from place to place, what are they considered

Geographical immobile

Scarcity

When a natural resources will run out and is limited

Shortage

Difficult in obtaining goods for a limited amount of time

Needs are

essential to live

Wants are

Not essential

Why are wants unlimited? Because of changes in-

Technology

Why are wants unlimited? Because we will

Never be satisfied with everything we consume

Why does scarcity exist

There are unlimited wants but limited resources so there will never be enough resources to satisfy all wants at any one point in time

Why does resource scarcity exist? Nat-

Natural Resources will eventually run out

Geographical immobility of labour

The difficulty of moving from one location to another to find work

Solutions to geographical immobility of labour?

Government could provide financial help, make more houses,

Mortgage meaning

an agreement that allows you to borrow money from a bank

What is the basic economic problem?

The Basic Economic Problem is that humans have unlimited wants due to changes in technology but there are limited resources to provide the goods/services that fulfil these wants. The economic problem is due to scarcity,

Example of oppurtunity cost

you can either buy a Snickers Bar or a Mars Bar. If you chose a Snickers Bar, then your opportunity cost is the Mars Bar

Solutions to reduce occupational immobility

government can find childcare, make more houses

What does PASIFIC stand for?

Population, advertising, substitute goods, incomes, fashion & trends, interest rate, complementary goods

what does the "P" in PASIFIC stand for?

population and it affects the demand because more people want the good/service

what does the "A" in PASIFIC stand for?

Advertising and it affects demand because more people will know and then want to buy the good or service

what does the "s" in PASIFIC stand for?

Substitute goods and it affects demand because if a price of one good goes up then the substitute of that goods demand will increase

what does the "i" in PASIFIC stand for? And how does it affect demand

Incomes affect demand because if they have a higher income that means they have more money to spend

what does the "F" in PASIFIC stand for? And how does it affect demand

Fashion and trends and it affects demand because if the good is trending the demand will rise

what does the second "I" in PASIFIC stand for? And how does it cause a shift in demand

Interest rates and affects demand because it reduces consumer spending and investment so therefore demand will fall

what does the "C" in PASIFIC stand for? And how does it cause a shift

Complementary goods and they cause a shift because if one item goes down the demand goes up for another good that is complementary

What is effective demand

Being willing and able to buy a good or service at a particular price

What is demand

the willingness and ability to buy a good, service or resource at a particular price.

Why is it as price falls more people are willing and able to buy a good(give three options)

The Law of Diminishing Marginal Utility, The Substitution Effect, The Income Effect

What is the law of diminishing marginal utility

each additional unit of a good or service consumed you get less satisfaction so u will pay less after each unit

What is total utility

the overall satisfaction you get from consuming all units of the good or service

What is utility

satisfaction you get from consuming a good or service

What are the change in demand

PASIFIC

What is marginal utility?

the additional satisfaction you get from consuming a good or service