: The Global Economy
3.1 Globalisation The term ‘globalisation’ describes a range of economic developments that enhance the ability of nations and firms to trade within a rules-based system. Topics Covered: -Growing Economies -Trade and Growth -Trading Blocs -Trade policy and trade negotiations -Exchange Rates 3.2 Economic factors in business expansion Firms need to be able to assess the relative merits of competing potential locations for market growth and production. Topics Covered: -Conditions that prompt trade -Assessing the potential of different economies 3.3 Impact of globalisation on global companies Firms need to understand the differences between consumers in different countries and cultures. Topics Covered: -Responding to global demand - Demand-side factors in global markets
End of unit assessments based on Topic 3.1, 3.2 and 3.3, these assessments are completed in timed conditions and are based on A-level exam questions, which helps prepare students for their A-Level examinations
Globalisation
from an economic perspective, the ever-increasing integration of the worlds local, regional and national economies in to single international market
Multinational corporation - MNC
a company with significant product operations in at least two countries
Absolute advantage
exists when a country is able to produce a good more cheaply in absolute terms than another country
Comparative advantage
Exists when a country is able to produce a good more cheaply relative to other goods produced domestically than another country
Bilateral trade agreement
a regional trade agreement between two countries
Trading bloc
A group of countries that have signed an agreement to reduce or eliminate tariffs, quotas and other protectionist barriers between themselves
Develop the individual:
Create a supportive community:
: The Global Economy 2
3.4 Impact of globalisation on local and national economies Large firms can wield significant market power and can have both positive and negative effects in the countries in which they operate. Topics Covered -Impact of MNCs -Ethical Issues -Controlling MNCs 3.5 Global labour markets Globalisation has opened up labour markets, giving firms access to a greater number of potential employees. Production has sometimes moved to where labour is cheaper and this has had an impact on both pay and job opportunities. Topics Covered: -Employment Patters -Wage Rates -Minimum wage legislation 3.6 Inequality and re-distribution Globalisation has helped to reduce the number of people living in absolute poverty and has had an impact on inequality between and within nations. Topics Covered: -Poverty and Inequality -Reducing Poverty -The Impact of inequality on economics agents -Re-distribution of income and wealth
End of unit assessments based on Topic 3.4, 3.5 and 3.6, these assessments are completed in timed conditions and are based on A-level exam questions, which helps prepare students for their A-Level examinations
Absolute poverty
When an individual cannot afford the basic needs of life in the country in which they live
Balance of payments
A record of a countrys trade in goods and services, investment income and transfers with the rest of the world
Exchange rate systems
The way in which the value of a domestic currency e.g. £ is determined. Exchange rate systems include floating, fixed and managed exchange rates
Globalisation
The integration of international economies leading to a world market
Income inequality
This occurs when there is a disparity in the flow of earnings of individuals or households
International competitiveness
The ability of a business to compete in global markets to become a leader in a given industry across the world
Restrictions on free trade
The instruments of policy that are used by governments to limit the free movement of goods and services between countries
Specialisation
When economic units, such as individuals, firms, regions or countries, concentrate on producing specific goods or services
Terms of trade
The terms of trade is the ratio of export prices to import prices
Trading blocs
Economic units formed when the governments of a group of countries agree to trade together freely i.e. normally with no trade barriers
Wealth inequality
This occurs when there is a disparity in the stock of financial assets e.g. houses owned by individuals or households
World Trade Organisation (WTO)
An organisation whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers
Develop the individual:
Create a supportive community:
: Making the Markets Work
4.1 Competition and market power Firms operate in markets with varying degrees of competition and this affects their decisions and the way in which resources are used. Topics Covered: -Spectrum of Competition -Barriers to entry -Oligopoly -Business Objectives and pricing decisions - Productive and allocative efficiency 4.2 Market power and market failure Firms do not always behave in a way that benefits all economic agents and governments may intervene to regulate the power these firms have. Topics Covered: -Market Failure -Business Regulation -Arguments for and against regulation 4.3 Market failure across the economy Markets may not produce outcomes that are always considered socially desirable. This may prompt governments to intervene in an attempt to change the outcomes. Topics Covered: -Market Failure in society - Externalities -Polices to deal with market failure
End of unit assessments based on Topic 4.1,4.2 and 4.3, these assessments are completed in timed conditions and are based on A-level exam questions, which helps prepare students for their A-Level examinations
Market failure
When the market is unable to efficiently allocate scarce resources to meet the needs of society
Externalities
The costs and benefits to a third party created by economic agents when undertaking their activities These costs and benefits can be either negative or positive
Public goods
A good where its use by an individual does not stop others from using it whilst its consumption does not reduce the amount available for consumption by others
Private goods
A good where its use by an individual stops others from using it whilst its consumption reduces the amount available for consumption by others
Information gaps
The difference in information between two parties
Government intervention
The use of regulatory frameworks to improve the working of individual markets
Government failure
When government intervention in markets leads to a net welfare loss in comparison to the free market operating alone
Develop the individual:
Create a supportive community:
: Making the Markets Work 2
4.4 Macroeconomic policies and impact on firms and individuals Economic fluctuations may well affect the fortunes of firms and individuals, and this encourages a demand for policies that reduce harm and promote wellbeing. Topics Covered: -The AD/AS model -Demand-side policies -Supply-side policies -The impact of macroeconomic policies 4.5 Risk and the financial sector Firms and individuals require access to credit to meet their respective needs. The financial sector provides a system that facilitates growth and development; economic policies regulate that system in the hope of ensuring stability. Topics Covered: -Risks and uncertainty -The role of the financial sector -The role of the central bank -The Global Financial Crisis
End of unit assessments based on Topic 4.4 and 4.5, these assessments are completed in timed conditions and are based on A-level exam questions, which helps prepare students for their A-Level examinations
Market failure
When the market is unable to efficiently allocate scarce resources to meet the needs of society
Externalities
The costs and benefits to a third party created by economic agents when undertaking their activities These costs and benefits can be either negative or positive
Public goods
A good where its use by an individual does not stop others from using it whilst its consumption does not reduce the amount available for consumption by others
Private goods
A good where its use by an individual stops others from using it whilst its consumption reduces the amount available for consumption by others
Information gaps
The difference in information between two parties
Government intervention
The use of regulatory frameworks to improve the working of individual markets
Government failure
When government intervention in markets leads to a net welfare loss in comparison to the free market operating alone
Develop the individual:
Create a supportive community:
: Revision
Revision for Theme 1,2,3 and 4. Paper 3 preparation on pre-release material.
Paper 1- Markets and how they work. (Theme 1 and 4) Paper 2- Competing in the global economy (Theme 2 and 3) Paper 3- The economic environment and business (Theme 1,2,3 and 4)
Market failure
When the market is unable to efficiently allocate scarce resources to meet the needs of society
Externalities
The costs and benefits to a third party created by economic agents when undertaking their activities These costs and benefits can be either negative or positive
Public goods
A good where its use by an individual does not stop others from using it whilst its consumption does not reduce the amount available for consumption by others
Private goods
A good where its use by an individual stops others from using it whilst its consumption reduces the amount available for consumption by others
Information gaps
The difference in information between two parties
Government intervention
The use of regulatory frameworks to improve the working of individual markets
Government failure
When government intervention in markets leads to a net welfare loss in comparison to the free market operating alone
Develop the individual:
Create a supportive community: