41 terms in 4.2.6
Economic growth and development
Economic growth means a country produces more output over time. Economic development means people's lives actually get b
The international economy
Economic growth and development
Less-developed economies share a set of common features that keep living standards low. These include low incomes, poor
The international economy
Economic growth and development
Economists use several measures to judge how developed a country is. The most important is the HDI, which combines incom
The international economy
Economic growth and development
Countries grow and develop faster when they invest in new machinery and infrastructure, and when they improve the skills
The international economy
Economic growth and development
Some countries stay poor because deep-rooted problems block investment and productivity. These barriers include corrupti
The international economy
Economic growth and development
Governments and international bodies use a range of policies to raise living standards in less-developed economies. Thes
The international economy
Economic growth and development
Aid means richer countries giving money or resources to poorer ones. Trade means countries buying and selling goods with
The international economy
Economic growth and development
A country can increase its GDP — the total value of goods and services it produces — without its citizens actually livin
The international economy
Exchange rate systems
A floating exchange rate is the price of one currency in terms of another. Supply and demand in the foreign exchange mar
The international economy
Exchange rate systems
Governments can push their currency's value up or down using several tools. These include changing interest rates, spend
The international economy
Exchange rate systems
A fixed exchange rate gives businesses certainty but removes a government's freedom to adjust the rate. A floating excha
The international economy
Exchange rate systems
A currency union is a group of countries that share one currency. Joining one removes exchange rate uncertainty but also
The international economy
Exchange rate systems
A country's exchange rate — the price of its currency in terms of another — can be determined in very different ways dep
The international economy
Globalisation
Globalisation — the growing economic integration of countries worldwide — has been driven by cheaper transport, new tech
The international economy
Globalisation
Globalisation means the world's economies are becoming more connected. Countries trade more, money moves across borders
The international economy
Globalisation
Globalisation creates opportunities and problems for all countries. Less-developed countries can attract investment and
The international economy
Globalisation
Multinational corporations (MNCs) are companies that operate in more than one country. They drive globalisation by movin
The international economy
Globalisation
Over recent decades, economies around the world have become increasingly interconnected through the growth of trade, for
The international economy
The balance of payments
Every country records all its money flows with the rest of the world in a document called the balance of payments. This
The international economy
The balance of payments
The current account records four types of money flows between a country and the rest of the world. These are: physical g
The international economy
The balance of payments
A current account deficit means a country spends more on imports and transfers abroad than it earns from exports and inc
The international economy
The balance of payments
Several forces shape whether a country earns more from the rest of the world than it spends. Productivity, inflation, an
The international economy
The balance of payments
When money moves between countries as investment, it affects jobs, incomes, exchange rates, and the balance of payments
The international economy
The balance of payments
Governments use several tools to fix a current account imbalance. These tools either reduce overall spending in the econ
The international economy
The balance of payments
Governments use two main strategies to fix a current account deficit. Expenditure-switching redirects spending away from
The international economy
The balance of payments
Fixing a current account imbalance often clashes with other economic goals. A policy that reduces a deficit can also slo
The international economy
The balance of payments
A current account deficit or surplus affects a country's economy in real ways. Deficits can weaken the currency and buil
The international economy
The balance of payments
When a large economy fixes its trade imbalance, the policies it uses ripple outward and affect growth, jobs, and trade i
The international economy
The balance of payments
Every country keeps a record of its financial transactions with the rest of the world, known as the balance of payments,
The international economy
Trade
Comparative advantage is a model that explains why countries trade. A country has comparative advantage in a good when i
The international economy
Trade
Absolute advantage means a country produces something using fewer resources than another country. Comparative advantage
The international economy
Trade
When countries focus on producing what they make most efficiently and then trade with each other, the world ends up with
The international economy
Trade
International trade lets firms sell to bigger markets, so they can cut costs by producing more. It also forces firms to
The international economy
Trade
International trade creates winners, but it also creates losers. Workers lose jobs when cheaper imports replace domestic
The international economy
Trade
The UK trades very differently today than it did fifty years ago. Several forces — including globalisation, deindustrial
The international economy
Trade
Protectionism means a government restricting imports or boosting exports to shield domestic industries from foreign comp
The international economy
Trade
Governments sometimes block or restrict imports to protect domestic industries. These protectionist policies create winn
The international economy
Trade
A customs union is a group of countries that remove trade barriers between themselves and charge the same tariffs on imp
The international economy
Trade
The Single European Market (SEM) allows goods, services, money, and people to move freely between EU member states. It r
The international economy
Trade
The World Trade Organisation (WTO) is an international body that sets the rules for trade between countries. It works to
The international economy
Trade
International trade is built on the idea of comparative advantage — the principle that countries benefit by specialising
The international economy