Economics Unit 3
- Created by: carmen.lau
- Created on: 29-04-15 20:19
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
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)
////
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
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)
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
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
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
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)
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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