Summary
The topic of Business and the International Economy covers the effects of globalisation, protectionist measures, multinational corporations, and exchange rates on businesses. It explores how these factors create opportunities and threats for businesses globally.
- Globalisation — the increased trade and movement of products and resources between economies.
Example: Free trade agreements allow countries to trade goods without barriers. - Protectionism — government policies to protect domestic businesses from foreign competition using tariffs and quotas.
Example: Import tariffs increase the price of imported goods, encouraging consumers to buy domestic products. - Multinational Corporations (MNCs) — businesses with operations in more than one country.
Example: MNCs can benefit from lower production costs in different countries. - Exchange Rate — the price of one currency in terms of another currency.
Example: Currency appreciation means you need more foreign currency to buy the same amount of local currency.
Exam Tips
Key Definitions to Remember
- Globalisation
- Protectionism
- Multinational Corporations (MNCs)
- Exchange Rate
Common Confusions
- Confusing the benefits and threats of globalisation
- Misunderstanding the impact of currency appreciation vs. depreciation
Typical Exam Questions
- What is globalisation? Globalisation is the increased trade and movement of products and resources between economies.
- How do import tariffs protect domestic businesses? Import tariffs increase the price of imported goods, making domestic products more competitive.
- What are the effects of currency depreciation on exports? Currency depreciation makes exports cheaper and more competitive internationally.
What Examiners Usually Test
- Understanding of how globalisation affects businesses
- Reasons for and effects of protectionist measures
- Impact of multinational corporations on economies
- Effects of exchange rate changes on imports and exports