Economics

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  • Created by: Vixinity
  • Created on: 24-04-14 19:02
Competitiveness
Measured by unit labour costs(wage rates), productivity, quality of the goods produced etc.
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How to Improve competitiveness
Education and training(Moving to tertiary industries), improve mobility of labour(Lower MWR), improve infrastructure, innovation, and through XR policies like devaluation of currency, and by improving macroeconomic stability. eg low inflation rate.
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Advantages of Globalisation
Advantages:Enhances division of labour leading to comparative advantage focus. Leads to EOS. Also leads to higher income per capita, improving poverty. And increases choice for consumers! WOOT WOOT
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Disadvantages of Globalisation
Leads to (Income) inequality by a rise in the gini-coefficient. Impact on the environment(Dolphins n all that) eg. deforestation. Unemployment bcos jobs being relocated to third world countries with low unit labour costs.
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Case for floating exchange rates
Allows freedom of domestic monetary policy, for example controlling inflation. You can correct a trade deficit, or any balance of payment equilibrium.
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Case for fixed exchange rates
Not volatile like floating XR's, so makes business easier(Encourages investment etc. less risk)
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Advantages of the euro(Monetary unions)
Stable prices.(Inflation must not be more than 1.5% higher than the average of the 3 countries with lowest inflation.
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Arguments for Protectionism
Helps infant industries. Protection of jobs. Protection of strategic industries(Evaluation...value judgement needed in determining correct industries)
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Arguments against protectionism
Higher prices for consumers in the case of tariffs. Welfare loss(Of course) because of restricted choice and higher prices. Can lead to inefficiencies(x) because protected firms lack incentives to innovate. And trade wars! Rawr!
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Other cards in this set

Card 2

Front

How to Improve competitiveness

Back

Education and training(Moving to tertiary industries), improve mobility of labour(Lower MWR), improve infrastructure, innovation, and through XR policies like devaluation of currency, and by improving macroeconomic stability. eg low inflation rate.

Card 3

Front

Advantages of Globalisation

Back

Preview of the front of card 3

Card 4

Front

Disadvantages of Globalisation

Back

Preview of the front of card 4

Card 5

Front

Case for floating exchange rates

Back

Preview of the front of card 5
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