24 terms in 4
Fixed Exchange Rates
Fixed exchange rates occur when governments maintain currency values at predetermined levels. Central banks intervene in
Theme 4: A Global Perspective
Floating Exchange Rates
Floating exchange rates are determined entirely by market forces of supply and demand for currencies. Governments do not
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Terms of Trade
Terms of trade measure the relative prices of exports and imports. Terms of trade = (Index of Export Prices / Index of I
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Trade Balance
The trade balance equals the value of exports minus imports. A trade surplus (exports exceed imports) creates a positive
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4.1.6: Protectionism
Protectionist policies include tariffs (taxes on imports), quotas (quantity limits), subsidies to domestic producers, an
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4.1.6: Protectionism
Tariffs are taxes on imported goods. Ad valorem tariffs are percentage taxes; specific tariffs are per-unit taxes. Both
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4.1.6: Protectionism
Import quotas limit the total quantity of imports to a fixed level. Unlike tariffs, quotas directly control quantity rat
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4.1.8: Exchange rates
An exchange rate is the price of one currency in terms of another (e.g., £1 = $1.25). Exchange rates are determined by s
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4.1.8: Exchange rates
Currency appreciation occurs when a currency's value increases relative to other currencies. The pound appreciates again
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4.1.8: Exchange rates
The Marshall-Lerner condition states that depreciation improves the trade balance if (PED of exports + PED of imports) >
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4.2.1: Absolute poverty
Absolute poverty refers to a condition where individuals lack sufficient income or resources to obtain basic necessities
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4.2.1: Absolute poverty
Relative poverty refers to deprivation relative to average living standards in a society, typically defined as income be
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4.2.2: Gini coefficient
The Gini coefficient (or Gini index) measures income inequality on a scale from 0 to 1 (or 0% to 100%). A value of 0 ind
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4.2.2: Gini coefficient
The Lorenz curve is a graph showing the cumulative percentage of income on the y-axis against cumulative percentage of p
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4.3: Emerging economies
Emerging economies are developing countries experiencing rapid economic growth, industrialisation, and integration into
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4.3: Emerging economies
Developing economies are low-income countries with limited industrialisation, predominantly agricultural sectors, low pe
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4.3.2: Foreign direct investment (FDI)
Foreign direct investment (FDI) is investment by multinational enterprises in productive assets in foreign countries, in
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4.3.2: Foreign direct investment (FDI)
The Harrod-Domar model states growth rate = (Savings Rate × Capital Output Ratio) / 1. Higher savings enable more invest
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4.3.3: Strategies for economic development
Development strategies are policy frameworks pursued by developing countries to promote economic growth and development.
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4.3.3: Strategies for economic development
The Lewis model describes development as labour transfer from low-productivity agricultural sector to high-productivity
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4.3.3: Strategies for economic development
Microfinance provides small loans (typically under $1,000) to poor entrepreneurs unable to access traditional banks. Inc
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