2406994
Description
Flashcards by Frankie Thatcher, updated more than 1 year ago
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Created by Frankie Thatcher
over 9 years ago
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| Question | Answer |
| What does the demand for goods depend on? | Te price of domestic goods, as well as the price of other goods. It also relies on consumer incomes and preferences. |
| What does the demand for UK exports depend on? | The price of UK goods, relative to prices of other countries' goods. Also, the income levels from around the world and international preferences on British goods. |
| What do the UK's international transactions depend on? | The exchange rate of the pound sterling, relative to other countries exchange rates. Also the purchasing power of UK incomes in the rest of the world |
| What does demand for imports into the UK depend on? | The price of domestic and foreign goods, relative to income levels in the UK. The preference for foreign and domestic produced goods also effect the demand, along with exchange rates. |
| Exchange Rates | Plays a key role in influencing the levels of imports and exports. EX: A fall in the Dollar ($2.50 in 1971 - $1.50 in 2007) will improve the UK's product competitiveness. |
| Real exchange rate (RXR) | Takes inflation into account (EX: If the pound falls 3% against the euro, but the UK inflation was higher than 3% than the Eurozone, RXR would be unaltered. |
| Terms of Trade | The ratio of export prices to import prices. It provides information about the purchasing power of exports in terms on imports. |
| What does a fall in trade indicate? | Same volume of exports will purchase a smaller volume of imports compared to before. This is unfavorable for any international economy. |
| Trade Welfare Index (TWI) | Measures the value of the pound against a basket of currencies which are weighted according to their importance in UK trade. |
| Effective Exchange Rate (EER) | How much trade a country does with the other countries. It also considers the extent to which the country competes with these other countries internationally. |
| Competitiveness | Is the ability of a nation to compete successfully internationally and sustain improvements in real output and wealth. |
| The Global Competitiveness Index | Yearly report published by the World Economic Forums (WEF). Made of 148 economies, Switzerland sit on top. It depends on how productively a country uses its available resources. |
| Balance of Payments (As a measure of International Competitiveness) | If the Current Account improves, exports have increased faster than imports. suggesting an improvement in competitiveness. (UK doesn't fulfill this) |
| Relative Unit Costs | Measurement of labour cost in one country relative to those in another. |
| Relative Productivity Measures | Output per worker per hour |
| Factors that effect international competitiveness. | Exchange Rates Wage Cost Non-Wage Costs Labour Productivity Education and Training |
| How does Education and Training effect international competitiveness? | Human capital is effected if education is bad, as the workforce will be badly trained and will not be productive. Infrastructure will be poor as the finished product is of poor quality. More people will work flexible hours (Ex: Zero Hour contract) |
| If the British industry was to become uncompetitive... | Lower economic growth Increased unemployment Deterioration on the balance of payments Devaluation of exchange rate Higher levels of inflation |
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