1
Q
What is globalisation
A
the process in which national economies have become increasingly integrated and interdependent.
2
Q
What is global branding
A
focusing on establishing a consistent brand image and message across different countries and cultures
3
Q
What is global sourcing
A
procuring goods or services from suppliers internationally
4
Q
What is a hub economy
A
a location that acts as a central point for economic activity
5
Q
What are some factors contributing to globalisation
A
- improvements in infrastructure
- communications technology and IT
- trade liberalisation / less protectionism
- more TNC’s
- increased migration
- growth of trade blocs
- containerisation
5
Q
What are some characteristics of globalisation
A
- global supply chains and new trade and investment routes
- industrialisation / deindustrialisation
- transnational corporations
- trade to GDP ratios
- foreign direct investment (FDI)
- financial capital flows
- ride of global brands and global sourcing
6
Q
what is industrialisation
A
the process of transforming the economic structure from primary to secondary.
7
Q
What id foreign direct investment (FDI)
A
the net transfer of funds (to purchase and acquire physical capital)
8
Q
What are some key facts about Vietnam
A
- 2nd largest exporter of coffee
- farming employing around 1/3 of workers
- buys intermediate goods and exports final consumer goods
9
Q
What is the biggest foreign exchange earner for Vietnam
A
travel and tourism services (More than 2/3 of exports)
10
Q
what does Vietnam have an interdependence on
A
Visitors from other countries and easy travel
11
Q
What is ASEAN
A
the Association of Southeast Asian Nations - international organisation - 10 members
12
Q
What are the key drivers of Vietnams economic growth and development
A
- Inward FDI
- trade surplus
- emerging middle class of consumers
- favourable demographics
- investment in travel and tourism
- urbanisation
- state investment in infrastructure
13
Q
What are some Key challenges with Vietnams development
A
- over reliance on FDI
- low productivity agriculture
- exposure to economic slowdown
- vulnerable to climate change
14
Q
What is deglobalisation
A
the decreasing interdependence and integration between countries
15
Q
What is an exchange rate
A
The value of a countries currency in relation to a foreign currency. It determines how much of your currency you can exchange for another
16
Q
What does FOREX stand for
A
the Foreign Exchange Market
17
Q
explain what happens in SPICED
A
when a currency APPRECIATES - imports become cheaper because it takes fewer domestic currency units to buy foreign goods, exports become more expensive for foreign buyers which reduce demand from them
18
Q
Explain what happens during WIPDEC
A
When a currency DEPRECIATES - it costs more to buy foreign goods, so imports are more expensive, UK exports become cheaper for foreign buyers so demand increases
19
Q
Why would demand for a currency increase
A
- high interest rates - more foreign investment
- higher exports so more demand for local currency
- FDI inflows
- speculation - future appreciation
- improved economic performance
20
Q
Why would demand for a currency decrease
A
- low interest rates discourage foreign investment
- higher imports / falling exports reduce demand for the local currency.
- political or economical depreciation
21
Q
Why would supply for a currency increase
A
- increased imports - domestic consumers need to buy foreign currency
- outward FDI
- tourism abroad
22
Q
Why would supply for a currency decrease
A
- reduction in imports
- Inflow of foreign investment reduces need to supply abroad
- export promotion or trade surplus
23
Q
What’s leads to a depreciation
A
a decrease in the supply or demand for a currency
24
What leads to an appreciation
an increase in the supply or demand for a currency
25
What is a bilateral exchange rate
Compares the value of one currency directly to another
26
What is an effective exchange rate
provides a broader view of how a currency is performing against multiple currencies
27
What does EER stand for
effective exchange rate
28
What does an increase in EER mean
means domestic currency is appreciating
29
What are the 3 different exchange rate systems
- floating exchange rate system
- fixed exchange rate system
- managed (dirty floating) exchange system
30
What is a floating exchange rate system
when the value of the currency is determined by the forces of supply and demand in the foreign exchange market, without central bank or government intervention.
31
What causes a floating exchange system to fluctuate
it fluctuates based on interest rates, inflation and trade flows
32
What is a fixed exchange rate system
the value of a currency is deliberately pegged by the government or central bank at a specific rate against another country, and the government maintains this rate by buying and swelling foreign currency reserves
33
What does the government do in a fixed exchange rate system
intervene to keep the rate fixed
34
What is a managed (dirty floating) exchange rate system
a currency mainly determines by market forces but the central bank may occasionally intervene in the foreign exchange market to influence the currencies value
35
What does the managed exchange rate system combine
elements of both managed and fixed exchange rates, allowing flexibility while maintaining stability.
36
Why are fixed exchange systems better:
- exchange rate stability - reduces risk of exchange rate fluctuations which can make trade and investment more predictable
- inflation control - pegging to a stable currency inflation is unlikely to spiral out of control
- promotes trade and investment - less risk in exchange rate making country more attractive for foreign investors.
- credibility for weak economies - helps build credibility
37
What is a depreciation
a currencies decline in value due to market forces
38
What is a devaluation
an intentional move by the government or central bank to reduce the currencies value in a controlled manner.
39
What is an appreciation
a currencies increase in value due to market forces
40
What is a revaluation
an intentional move by the government or central bank to increase the currencies value in a controlled manner
41
What system do appreciation and depreciations occur
under a floating exchange system
42
What’s system do devaluation and revaluations occur
a fixed exchange rate system
43
Does a depreciation or devaluation improve or worsen a countries trade deficit
improves the trade deficit
44
Does an appreciation or revaluation improve or worsen a countries trade deficit
worsens the trade deficit
45
What does a depreciation do to a trade deficit
it reduces export prices and increases import prices - increase net export (X-M) and the trade deficit improves
46
What do responses to price changes depend on
The PED of exports and imports
47
What does the J curve show
the relationship between trade balance and change in exchange rate
48
What does the J curve say
that a trade deficit will first worsen after depreciation, but improve in the medium term if the Marshall-Lerner condition holds
49
What is the Marshall-Lerner condition
for the depreciation to improve the current account the PED of X + the PED of M must be greater or equal to 1
(Provided the sum of elasticities is greater than 1)
50
are PED’s low in the long run or short run
short run - trade deficit worsens - but over time they rise
51
What lag does the J curve show
the time lag between currency depreciation or devaluation and an improvement in the trade balance
52
What are some of the causes of the time lag
- domestic producers may not have spare capacity
- exports may be supplied under contracts that can’t be immediately renegotiated
- consumers and firms may wish to see whether devaluation is temporary or permanent
53
What is FDI
the movement of capital across borders in the form of investments - categorised into inflows and outflows.
54
Does an appreciation or depreciation bring more FDI inflows for a country
a depreciation - multiplier effect
55
Does an appreciation or depreciation bring less FDI inflows for a country
an appreciation
56
Why is there trade
- access to resources
- efficient and cost
- variety and choice
- economic growth
57
What is absolute advantage
when a country can produce more of a good worth the same resources as another country
58
What is comparative advantage
when a country can produce a good at a lower opportunity cost than another country
59
What is opportunity cost in the context of specialisation and trade
the amount of one good that must be sacrificed to produce as additional unit of another good
60
What does a steeper curve mean
that there is more comparative advantage
61
What are some evaluative points for comparative advantage
- assumes perfect knowledge
- no economies of scale
- rates of inflation ignored
- no import controls
62
What are the advantages of specialisation and trade
- efficiency and output increases
- larger markets and economies of scale for firms
- access to wider variety of goods and lower prices for consumers
- better resource allocation
- higher economic growth and living standards
Greater international cooperation
63
What are the disadvantages of specialisation and trade
- a deficit on trade of goods and services balance could arise if a countries goods and services are uncompetitive.
- danger of dumping foreign firms
- increased unemployment
- increased economic integration might result in increased exposure to external shocks
- global monopolies as TNC’s become larger
64
What is unbalanced development
international specialisation based on free trade means that only industries in. Which other countries has comparative advantage will be develop[ed and others wont.
65
What are mutually beneficial terms of trade
if both countries specialise in the goo for which they have a comparative advantage and then trade with each other, they both end up better off than they would be without trade
66
Why is mutually beneficial terms of trade good for countries
- specialisation allows production to be more efficient
- countries can obtain goods at a lower opportunity cost
- total global output increases
- countries can obtain a mix of goods that they could not have produced and overall have a better allocation of resources
67
What is an emerging economy
An economy in which gathering country is becoming a developed nation often driven by relatively high economic growth and a rapid expansion of trade and investment
68
How have emerging economies influenced global trade patterns
become major exporters and manufacturers of goods and services - they can compete with some developed countries
69
What is south - south trade
the increase in economic exchange between developing countries
70
What are the reasons for south-south trade
- rapid growth in emerging markets - increased demand for goods
- lower transport and labour costs - regional trade
- regional trade agreements e.g. ASEAN.
- similar levels of development mean greater demand for manufactured goods and raw materials from countries.
71
What is terms of trade
measure a countries relative prices of its exports compared to the cost of its imports (ratio of export prices to import prices).
71
What is a trading bloc
A group of countries that form agreements to promote trade among themselves. Bilateral trade agreements are agreements between two countries to facilitate trade.
72
How do you calculate the Terms of trade (ToT)
ToT = index of export prices / index of import prices x 100
73
what value does the base year have
100
74
What will happen if import prices increase more than exports
The country must export a greater volume of its goods to acquire the same volume of imports
74
how to find an index of exports
Price of exports in current year / price of imports in base year x 100
75
What does it mean if ToT is below 100
deterioration/ worsening terms of trade in comparison to the base year
macro economics
flashcards
Decks in class (29)
# Cards
-
circular flow of income17
-
measures of economic activity26
-
production possibility frontier (PPF)32
-
aggregate demand23
-
investment and spending18
-
pre learning week 524
-
pre learning week 66
-
multiplier5
-
aggregate supply33
-
Macroeconomic equilibrium and objectives16
-
Meaning and representation of economic growth12
-
Economic growth34
-
Output gaps and the trade cycle17
-
inflation and deflation18
-
benefits & costs of inflation16
-
sectors of the economy5
-
long run aggregate supply11
-
Multiplier24
-
PPP6
-
GDP and standards of living7
-
inflation and deflation6
-
CPI7
-
inflaation7
-
Specialisation and pattern of trade19
-
Trading Blocs6
-
Theme 4 revision78
-
Theme 462
-
UK - case study7
-
4.4108
