Theme 2 - International trade

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  • Created by: becky.65
  • Created on: 20-05-17 18:56
What are the advantages of specialisation?
Increased output and efficiency, economies of scale are gained as output increases, goods and services can be produced more cheaply, competitive advantage is enhanced, export earnings increase, competition amongst producers helps to lower price
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What are the disadvantages of specialisation?
Can lead to over reliance on one area of the economy, competitive advantage can move elsewhere, emerging economies rely on one commodity product, fluctuating commodity prices can be a problem, reliance on imports and structural unemployment
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What do trade blocs encourage?
Access to other markets, specialisation and new markets
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What are free trade areas?
Groups of countries that trade freely with each other, with no trade barriers, but each county retains its own independent trade policies to the rest of the world
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What are common markets?
Markets that have free trade internally and common external trade policy covering the rest of the world. There is free movement of goods, services, people and capital
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How can trade and specialisation lead to economic growth?
If countries specialise in the goods they can produce most efficiently and they can import products they produce less efficiently so global output will increase
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What is the Balance of Trade?
The revenue generated by the sales of visible exports, less the cost of buying visible imports
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What is a trade surplus?
We are exporting more than we are importing
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What is a trade deficit?
We are importing more than we are exporting
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What are the positive effects cheap imports have?
The consumer has more disposable income left to spend on other things; producers may be able to source cheap raw materials from abroad enabling them to cut costs and it keeps inflation low
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What are the negative effects cheap imports have?
They harm domestic industry, so some domestic businesses cannot compete with imports and exit the market which may increase unemployment and lead to a structural change
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Other cards in this set

Card 2

Front

What are the disadvantages of specialisation?

Back

Can lead to over reliance on one area of the economy, competitive advantage can move elsewhere, emerging economies rely on one commodity product, fluctuating commodity prices can be a problem, reliance on imports and structural unemployment

Card 3

Front

What do trade blocs encourage?

Back

Preview of the front of card 3

Card 4

Front

What are free trade areas?

Back

Preview of the front of card 4

Card 5

Front

What are common markets?

Back

Preview of the front of card 5
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