economics unit 3 aqa gcse

economics unit 3 aqa gcse 

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  • Created on: 25-05-12 09:14
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Globalisation ­ an expansion of world trade in goods and services leading to greater international
interdependence.
What has led to globalisation?
Transport
Technology (eg communication)
Rising real living standards
Decline in protection
Economies of scale
Benefits
Low inflation
Sustained economic growth
High levels of FDI
Rising productivity
Helped to sell overseas
UKs second in higher and further education
English is the language of internet
Consumer choice and price
Reduction in shortages of skilled labour
Costs
Loss of jobs in manufacturing industry
FDI prevents firms later moving to lower cost countries
Larger current account deficit
UK open to risks outside control of government
Environmental problems
Harder for smaller businesses
Multinational company ­ a company that has operations all over the world.
Advantages of MNC
International markets
Cheaper labour costs
Take advantage of different strengths of companies
Transport/distribution costs
Favourable tax environment
Government grants
Disadvantages of MNC
Loss of jobs
Export of technology
Dependency on imports
Loss of tax revenues

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Specialisation ­ being better than another country at providing a good or service, in terms of the
quantity of output and lower cost.
Absolute advantage ­ when a country is able to provide a good or service using fewer resources
and at a lower cost than another country.
International trade ­ the exchange of goods and services across international boundaries.…read more

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Regulations ­ trying to limit imports through variety of rules (eg cars have to have lights on
in Sweden)
Costs of BRICS growing
Larger markets for UK exports
Cheaper imports
Benefits of BRICs growing
Loss of manufacturing jobs
Increase in global warming
Rising costs of raw materials…read more

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Single market ­ the economies of different countries can be treated as one when a firm is
considering its domestic market
Customs union ­ a group of countries, such as the EU, have free trade between members, but a
common external barrier
Advantages of SM
Specialisation and economies of scale
Free movement of capital
Free movement of labour
Competition
Higher economic growth and standards of living
Disadvantages of SM
Job losses
Attract capital and jobs away
Manufacturing firms are attracted to the low labour costs…read more

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Current account ­ the balance of trade in goods and services plus net investment incomes from
overseas assets
Current account deficit ­ the value of imports exceeds the value of exports
Current account surplus ­ the value of exports exceeds the value of imports
Reasons for deficit
Loss of advantage in many industries
Globalisation
Growth in peoples real incomes
Exchange rate
Low levels of productivity and investment
Relatively weak product innovation…read more

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Exchange rate ­ how much of one currency needs to be given up to buy one unit of another currency
Floating exchange rate ­ where the prices of two currencies are decided by market forces
Fixed exchange rate ­ where the central bank of a country tries to decide on the price of a currency
International competitiveness ­ the ability of companies to compete with companies from other
countries
Competitiveness ­ the ability of a country to compete successfully internationally and maintain
improvements in real…read more

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