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IGCSE Economics (International Economics (Balance of payments (Current…

- - - - Efficiency gains - makes better use of scarce resources.
      - Improved labour productivity due to more skilled labourers.
      - Increased productive capacity
      - Economies of scale
      - Improved international competitiveness
    - - Overspecialisation can cause structural and regional unemployment.
      - High labour turnover
      - Low labour mobility
      - Lack of variety in domestic products for consumers
      - High costs to pay highly specialised and skilled workers
  - - - Consequences
        
        Reduced aggregate demand
        
        Unemployment
        
        Lower standards of living
        
        Increased borrowing
        
        Lower exchange rate; imported inflation
      - import expenditure > export earnings
    - - Consequences
        
        Employment rises domestically, but can cause unemployment in other countries
        
        Standards of living rise
        
        Demand pull inflation due to high demand for exports
        
        High demand for currency causes it to appreciate
  - - - Changes in demand for exports
      - Changes in demand for imports
      - Prices and inflation
      - Foreign direct investment
      - Speculation
      - Government intervention
    - - Appreciation
      - Depreciation
  - - - Access to resources
      - Lower prices
      - Economies of scale for firms
      - Greater choice
      - Increased market size
      - Efficiency gains due to foreign competition
      - Improved international relations
- - - - Consequences of unemployment
        
        On individuals
        
        Low standards of living
        
        Stress
        
        Lose employable skills
        
        Social and health problems
        
        Low self-esteem
        
        On society
        
        Less consumer spending
        
        Loss for firms
        
        Business failure - bankruptcy
        
        Higher expenditure by government on welfare benefits
        
        The country is less internationally competitive
        
        Higher crime rate
    - - Causes of inflation
        
        Demand-pull inflation
        
        Cost-push inflation
      - Consequences of inflation
        
        Income inequality increases
        
        Savers and lenders face loss
        
        Fixed income earners face loss
        
        Lack of certainty in the economy
        
        Decreases international competitiveness
    - - C + I + G + (X-M)
      - Causes
        
        Factor Endowments
        
        Labour Force - size, skills and mobility
        
        Labour Productivity
        
        Investment Expenditure
    - - Remedies
        
        Supply side policies
        
        Policies to reduce unemployment
        
        Policies to increase the quantity and quality of education
        
        Sustained economic growth
        
        Labour market reforms
        
        Fiscal policies
        
        Monetary policies
        
        Encourage borrowing with low interest rates
        
        Low exchange rates for greater export sales
  - - - Monetary policy
        
        Changing interest rate
        
        Changing money supply
        
        Exchange rates
      - Fiscal policy
        
        Government spending
        
        Taxation
      - Types
        
        Expansionary
        
        Contractionary
    - - Policies
        
        Privatisation
        
        Deregulation
        
        Human capital investment
        
        Subsidies
        
        Tax reforms
        
        Enterprise zones
    - - Types
        
        Tariffs
        
        Quotas
        
        Subsidies
        
        Administrative barriers
        
        Embargo
      - Reasons
        
        Protect infant industries
        
        Protect domestic jobs
        
        Prevent dumping
        
        Government revenue
        
        Overcome a balance of payments deficit
        
        Reduce dependency on other nations