Economics Unit 3

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Importing/Exporting // Balance of Payments

Importing- Buying goods and services from abroad:

  • A necessity to import, Money goes OUT of the country
  • We import cars, petrol etc
  • More choices for uk consumers, Not good for the country's economy
  • Many imports are from the EU (No taxes or tariffs)

Exporting- Selling goods and services abroad:

  • Made in the UK, Money come IN to the UK
  • We sell cars, chemicals etc
  • Good for country, Most exports to the EU (No taxes)

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Balance of payments:

  • Export (Cost)- Import (Cost)
  • If this number is positive, it is good for the country (We should export more than import)
  • If this number is negative, it means more money is leaving than coming in
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Importing/Exporting // Balance of Payments

Importing- Buying goods and services from abroad:

  • A necessity to import, Money goes OUT of the country
  • We import cars, petrol etc
  • More choices for uk consumers, Not good for the country's economy
  • Many imports are from the EU (No taxes or tariffs)

Exporting- Selling goods and services abroad:

  • Made in the UK, Money come IN to the UK
  • We sell cars, chemicals etc
  • Good for country, Most exports to the EU (No taxes)

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Balance of payments:

  • Export (Cost)- Import (Cost)
  • If this number is positive, it is good for the country (We should export more than import)
  • If this number is negative, it means more money is leaving than coming in
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International Trade

Advantages:

  • More production (More jobs), GDP (Gross domestic product) rises
  • More choice, Lower prices
  • More competition- better quality, More raw materials

Disadvantages:

  • UK frims may not be able to compete against bigger firms, Bigger carbon footprint
  • UK is dependant for food, Unstable prices- could rise suddenly
  • More powerful MNCs (Multinational Corporations)

Social & Environmental Impact:

  • Costs more to transport
  • More jobs in less developed countries
  • Ruins enviroment (More carbon dioxide)
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Exchange rates

An exchange rate is the amount that you have to pay to but something in another country

  1=$2- Every dollar we want to buy will cost 50p. For an item worth $10, we would pay  5

To calculate the amount of pounds or other currency

  •   x exchange rate (changes often) = $ (other currency)
  • $ (other currency)    exchange rate = 

Buy more:                        Buy less:

  • Strong                         Weak
  • Pound                         Pound
  • Imports                       Imports
  • Cheaper                      Dearer
  • Exports                       Exports
  • Dearer                        Cheaper
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Impact of Exchange rates // Euro

Impact of exchange rates on individuals:

  • If the value of the pound appreciates (increases), you will recieve more of the foreign currency
  • If the value of the pound depreciates, you will recieve less of the foreign currency
  • The cost of foreign holidays, imported foods & goods is directly related to the exchange rate of the pound

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The euro is good for trade because:

  • No taxes or tariffs in the EU
  • No need to convert currency
  • Generally quite strong
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Power of the consumer

Boycott: To stop buying or using a product to force a company to do (or stop doing) a certain action

Consumer empowerment: Concumers show their needs, wants & demands through their purchases

Fairtrade: Consumers are willing to pay more for fairtrade because it is supporting a good cause- paying farmers at least a living wage

Sustainability: Make sure that whatever they take is replaced for the future

Sweatshops: When factories pay workers very low wages, have terrible conditions, long working hours and use child labour

Carbon Footprint: The total carbon dioxide caused by an individual, event, organisation or product

Do consumers care about ethics?

  • Yes- boycotts and fairtrade
  • No- many like lower prices
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Reducing World Poverty // Migration

Reducing World Poverty- They try to:

  • Remove extreme poverty and hunger
  • Achieve universal education
  • Ensure environmental sustainability
  • Allow poorer countries to sell their products freely and reduce taxes on their goods

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Immigration- Migration INTO another country:

  • New skills and knowledge, More workers
  • More consumers
  • Displace UK workers
  • Increases strain on social services, education & hospitals

Emigration- Migration TO another country:

  • Fewer pensions/benefits, Less competition of jobs
  • Loss of young people, Division of families
  • Higher death rate ( More elderly)
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Globalisation // Mobility of Labour

Uk Firms operating abroad:

  • Lower operating & labour costs, Increased competitiveness
  • Closer to markets and/or materials
  • If the exchange rate falls, there are lower export prices
  • Loss of jobs in UK, Unfamiliar cultures/language
  • Exchange rates and transport costs

Foreign Firms operating in the UK (Foreign Direct Investment):

  • More jobs, More tax money
  • More products to choose from, Better prices
  • More competition, Money leaves UK

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Mobility of Labour: The ability for workers to change between jobs

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