Exam code: 0455 & 0987
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Define globalisation.
Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods and services, technology and finance.
Trade increases as countries buy and sell more with each other, leading to greater and exchange of goods and services.
Trade increases as countries buy and sell more with each other, leading to greater specialisation and exchange of goods and services.
True or False?
Global competition always leads to lower prices for consumers.
False.
While global competition can lead to lower prices, it may also reduce competition within a country if domestic firms are pushed out, possibly leading to higher prices.
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Define globalisation.
Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods and services, technology and finance.
Trade increases as countries buy and sell more with each other, leading to greater and exchange of goods and services.
Trade increases as countries buy and sell more with each other, leading to greater specialisation and exchange of goods and services.
True or False?
Global competition always leads to lower prices for consumers.
False.
While global competition can lead to lower prices, it may also reduce competition within a country if domestic firms are pushed out, possibly leading to higher prices.
Improvements in and have lowered the cost and increased the speed of global trade.
Improvements in transport and communication have lowered the cost and increased the speed of global trade.
What does it mean for economies to become interdependent as a result of globalisation?
It means that the economies of different countries become more reliant on each other for goods, services, finance and technology, so changes in one country can significantly affect others.
How do reductions in trade restrictions affect globalisation?
Reductions in trade restrictions such as tariffs and quotas make it easier for countries to trade, thereby increasing globalisation.
Sharing of technologies can be a positive environmental effect of globalisation, while increased raises emissions.
Sharing of green technologies can be a positive environmental effect of globalisation, while increased production raises emissions.
What is one possible effect of migration on receiving countries due to globalisation?
Migration can increase unemployment or create pressure on services such as housing and healthcare in receiving countries.
True or False?
Globalisation always reduces the income gap between skilled and unskilled workers.
False.
Globalisation may actually widen the income gap between skilled and unskilled workers.
Export-led helps raise GDP and living standards, but can create long-term dependence on .
Export-led growth helps raise GDP and living standards, but can create long-term dependence on MNCs.
Define multinational corporation (MNC).
A multinational corporation (MNC) is a business with production facilities in two or more countries.
What is an example of a multinational corporation (MNC)?
An example of a multinational corporation (MNC) is Apple, which has production facilities in several countries.
True or False?
Globalisation has made it easier for firms to become multinational corporations.
True.
Globalisation has enabled firms to do business globally, increasing the number and size of MNCs.
What is one advantage of MNCs for the home country?
One advantage of MNCs for the home country is that they earn profits from overseas operations, which can be sent back and boost the home economy.
What is one disadvantage of MNCs for the home country?
One disadvantage of MNCs for the home country is job losses, as some jobs move abroad where production is cheaper.
True or False?
MNCs may be criticised for causing environmental damage in host countries.
True.
MNCs can be blamed for pollution and environmental harm, especially where regulations are weak in host countries.
True or False?
MNCs can bring both advantages and disadvantages to their home and host countries.
True.
MNCs can generate more profit, open new markets, and reduce costs, but may also cause job losses, poor working conditions, and environmental damage in both their home and host countries.
Define protectionism.
Protectionism is the practice of restricting international trade to protect domestic industries from foreign competition.
What is the main aim of free trade?
The main aim of free trade is to maximise global output through national specialisation.
A government might use to raise revenue, protect jobs, or manage imports.
A government might use import tariffs to raise revenue, protect jobs, or manage imports.
Why might a country protect infant industries?
A country may protect infant industries to help new sectors develop until they become efficient and competitive against foreign firms.
True or False?
Dumping refers to selling goods below cost to gain market share.
True.
Dumping is when foreign producers sell goods below cost to gain market share, hurting domestic firms.
Limiting imports of alcohol or tobacco is an example of restricting goods to reduce harm to public health.
Limiting imports of alcohol or tobacco is an example of restricting demerit goods to reduce harm to public health.
What are two possible disadvantages for consumers in the home country when trade restrictions are imposed?
Consumers may face higher prices and less variety as a result of trade restrictions increasing import costs.
Trade restrictions may provoke from other countries, leading to trade wars.
Trade restrictions may provoke retaliation from other countries, leading to trade wars.
Define trade embargo.
A trade embargo is a government order that completely bans trade with a particular country or the exchange of specific goods.
How can protectionism affect innovation and efficiency in domestic firms?
Protectionism can lead to slower innovation and make domestic firms less efficient because they face less competition from abroad.
Define tariff.
A tariff is a tax on imported goods or services, making imports more expensive than domestic products.
How does a tariff affect domestic producers?
A tariff makes imports more expensive, allowing domestic producers to increase output and market share as consumers switch to local goods.
True or False?
Tariffs only benefit domestic producers and have no negative effects on consumers.
False.
Tariffs raise prices and reduce consumer choice, which can lower living standards, especially for low-income households.
Define subsidy.
A subsidy is an amount of money paid by the government to firms for each unit produced, lowering their costs and increasing output.
How do subsidies affect consumers?
Subsidies allow firms to lower prices, making goods more affordable for consumers and improving their standard of living.
True or False?
Subsidies have no cost to the government.
False.
Subsidies represent a cost to the government budget and have an opportunity cost, as the money could be used elsewhere.
Define quota.
A quota is a physical limit set by a country on the amount of a certain good that can be imported, usually set below the free market level.
A quota raises the market and may create .
A quota raises the market price and may create shortages.
How do quotas affect domestic employment?
Quotas can increase domestic employment by allowing local firms to supply more goods due to reduced competition from imports.
True or False?
Quotas benefit all stakeholders equally.
False.
Quotas raise prices and reduce choice for consumers, but can increase output and jobs for domestic producers while harming foreign producers.
Define embargo.
An embargo is a complete ban on trade with a specific country, usually for political reasons.
What is a likely effect of an embargo on foreign producers?
Foreign producers lose sales and profits and may go out of business or have to reduce their workforce if they cannot access the embargoing country's market.
An embargo usually results in prices and sometimes a of products.
An embargo usually results in higher prices and sometimes a shortage of products.
True or False?
Governments usually gain tariff revenue when they impose an embargo.
False.
Embargoes are a complete ban on trade, so governments do not earn tariff revenue from the restricted goods.