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Science Press i Contents Dot Point HSC Economics UÊœ…>˜Ê …>��ÊUÊ>ÕÀˆÊÕ«Ì>ÊU - Ê " " -

© Science Press 2011 First published 2011 Science Press Private Bag 7023 Marrickville NSW 1475 Australia Tel: (02) 9516 1122 Fax: (02) 9550 1915 sales@sciencepress.com.au www.sciencepress.com.auAll rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Science Press. ABN 98 000 073 861

Science Press iii Contents Dot Point HSC Economics Contents Introduction v Verbs to Watch vi Dot Points The Global Economy vii Australia’s Place in the Global Economy ix Economic Issues xi Economic Policies and Management xiii Questions The Global Economy 1 Australia’s Place in the Global Economy 43 Economic Issues 77 Economic Policies and Management 139 Answers The Global Economy 191 Australia’s Place in the Global Economy 201 Economic Issues 211 Economic Policies and Management 231

Science Press iv Dot Point HSC Economics Contents Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press v Dot Point HSC EconomicsIntroduction Introduction What the book includes This book provides questions and answers for each dot point in the Board of Studies syllabus for the following topics in the Year 12 Economics course. ‡ 7KH*OREDO(FRQRP\ ‡ $XVWUDOLD¶V3ODFHLQWKH*OREDO(FRQRP\ ‡ (FRQRPLF,VVXHV ‡ (FRQRPLF3ROLFLHVDQG0DQDJHPHQW Format of the book The book has been formatted in the following way: 1. Main topic statement from syllabus. 1.1 Syllabus requirement. 1.1.1 First question for this syllabus requirement. 1.1.2 Second question for this syllabus requirement. The number of lines provided for each answer gives an indication of how many marks the question might be worth in an examination. As a rough rule, every two lines of answer might be worth one mark. How to use this book Completing all questions will provide you with a summary of all the work you need to know from the syllabus. You may have done work in addition to this with your teacher as extension work. Obviously this is not covered, but you may need to know this additional work for your school exams. When working through the questions, write the answers you have to look up in a different colour to those you know without having to research the work. This will provide you with a quick reference for work needing further revision.

Science Press vi Dot Point HSC Economics Verbs to Watch account, account for State reasons for, report on, give an account of, narrate a series of events or transactions. analyse Identify components and the relationships among them, draw out and relate implications. apply Use, utilise, employ in a particular situation. appreciate Make a judgement about the value of something. assess Make a judgement of value, quality, outcomes, results or size. calculate 'HWHUPLQHIURPJLYHQIDFWV¿JXUHVRULQIRUPDWLRQ clarify Make clear or plain. classify Arrange into classes, groups or categories. compare Show how things are similar or different. construct Make, build, put together items or arguments. contrast Show how things are different or opposite. critically (analyse/evaluate) Add a degree or level of accuracy, depth, knowledge DQGXQGHUVWDQGLQJORJLFTXHVWLRQLQJUHÀHFWLRQDQG quality to an analysis or evaluation. deduce Draw conclusions. GH¿QH State the meaning of and identify essential qualities. demonstrate Show by example. describe Provide characteristics and features. discuss Identify issues and provide points for and against.distinguish Recognise or note/indicate as being distinct or different from, note difference between things. evaluate Make a judgement based on criteria. examine Inquire into. explain Relate cause and effect, make the relationship between things evident, provide why and/or how. extract Choose relevant and/or appropriate details. extrapolate Infer from what is known. identify Recognise and name. interpret Draw meaning from. investigate Plan, inquire into and draw conclusions about. justify Support an argument or conclusion. outline Sketch in general terms; indicate the main features. predict Suggest what may happen based on available data. propose Put forward a point of view, idea, argument, suggestion for consideration or action. recall Present remembered ideas, facts or experiences. recommend Provide reasons in favour. recount Retell a series of events. summarise Express concisely the relevant details. synthesise Put together various elements to make a whole. Verbs to Watch

Science Press vii Dot Point HSC EconomicsThe Global Economy 1. International economic integration. 3 1.1 The global economy. 3 1.2 Gross world product. 3 1.3 Globalisation. 6 1.4 International and regional 7 business cycles. 7UDGH¿QDQFLDOÀRZVDQGIRUHLJQ9 investment. 2.1 The basis of free trade. 9 2.2 Role of international organisations. 12 ,QÀXHQFHRIJRYHUQPHQWHFRQRPLF 14 forums. 2.4 Trading blocs, monetary unions 19 and free trade agreements. 3. Protection. 21 3.1 Reasons for protection. 21 3.2 Methods of protection and effects 24 of protectionist policies.4. Globalisation and economic 27 development. 4.1 Differences between economic 27 growth and economic development. 4.2 Distribution of income and wealth. 29 4.3 Income and quality of life indicators. 30 4.4 Developing economies, emerging 32 economies, advanced economies. 4.5 Reasons for differences between nations. 33 4.6 Effects of globalisation. 35 4.7 Trade, investment and transnational 37 corporations. 4.8 Environmental sustainability. 40 4.9 International business cycles. 41 $QVZHUVWR7KH*OREDO(FRQRP\191 The Global Economy Dot Point Page Dot Point Page

Science Press viii Dot Point HSC Economics The Global Economy Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press ix Dot Point HSC Economics Australia’s Place in the Global Economy 1. Value, composition and direction 45 RI$XVWUDOLD¶VWUDGHDQG¿QDQFLDO ÀRZV 1.1 Trends in Australia’s trade patterns. 45 7UHQGVLQ¿QDQFLDOÀRZV± 49 debt and equity. 2. Australia’s balance of payments. 51 2.1 Structure. 51 2.2 Links between key balance of payments 53 categories. 2.3 Trends in the size and composition of 56 Australia’s balance of payments. ([FKDQJHUDWHV59 3.1 Measurement of relative exchange rates. 59 3.2 Factors affecting the demand for 60 and supply of Australian dollars. &KDQJHVLQH[FKDQJHUDWHV± 61 appreciation and depreciation.3.4 Determination of exchange rates 66 LQFOXGLQJ¿[HGÀH[LEOHDQG managed rates. ,QÀXHQFHRIWKH5HVHUYHEDQNRI 67 Australia on exchange rates. (IIHFWVRIÀXFWXDWLRQVRIH[FKDQJH 68 rates on the Australian economy. 4. Free trade and protection. 71 4.1 Australia’s policies regarding free 71 trade and protection. 4.2 Australia’s multilateral and bilateral 72 free trade agreements. 4.3 Implications of Australia’s policies for 73 LQGLYLGXDOV¿UPVDQGJRYHUQPHQWV 4.4 Implications for Australia of 74 protectionist policies of other countries and trading blocs. $QVZHUVWR$XVWUDOLD¶V3ODFHLQWKH201 *OREDO(FRQRP\ Australia’s Place in the Global Economy Dot Point Page Dot Point Page

Science Press x Dot Point HSC Economics Australia’s Place in the Global Economy Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press xi Dot Point HSC EconomicsEconomic Issues (FRQRPLFJURZWK79 1.1 Aggregate demand and its components: 79

Science Press xii Dot Point HSC Economics Economic Issues Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press xiii Dot Point HSC Economics Economic Policies and Management (FRQRPLFREMHFWLYHV141 1.1 Economic growth and quality of life. 141 1.2 Full employment. 142 1.3 Price stability. 143 1.4 External stability. 144 1.5 Environmental sustainability. 145 1.6 Distribution of income. 146 3RWHQWLDOFRQÀLFWVLQUHODWLRQWR 147 economic objectives. 2. Macroeconomic policies. 149 2.1 Rationale for macroeconomic policies. 149 3. Fiscal policy. 151 3.1 Federal government budgets and 151 budget outcomes. 3.2 Effects of budgetary changes. 153 0HWKRGVRI¿QDQFLQJGH¿FLWV 155 3.4 Use of a surplus. 156 4. Monetary policy. 157 4.1 Purpose of monetary policy. 157 4.2 Implementation of monetary policy 158 by the Reserve Bank of Australia. 4.3 Impact of changes in interest rates 159 on economic activity and the exchange rate. 5. Microeconomic policies. 163 5.1 Rationale for microeconomic policies. 163 5.2 Effects of microeconomic policies. 165 5.3 Regulation and deregulation 167 ±FRPSHWLWLRQSROLF\6. Labour market policies. 169 6.1 Role of national and state systems. 169 6.2 The national system for determining 170 policies. 6.3 Dispute resolution. 173 6.4 Arguments for and against. 174 6.5 Education, training and employment 175 programs. 7. National and global context for 177 environmental management. 7.1 Regulations. 177 7.2 Market-based policies. 178 7.3 Targets. 179 7.4 International agreements. 180 8. Limitations of economic policies. 181 8.1 Time lags. 181 *OREDOLQÀXHQFHV 181 8.3 Political constraints. 181 9. Policy responses and their effects 183 LQGHDOLQJZLWKWKHHFRQRPLF objectives. 9.1 Economic growth and quality of life. 183 9.2 Full employment. 184 9.3 Price stability. 185 9.4 External stability. 186 9.5 Distribution of income. 187 9.6 Environmental sustainability. 188 $QVZHUVWR(FRQRPLF3ROLFLHV231 and Management Economic Policies and Management Dot Point Page Dot Point Page

Science Press xiv Dot Point HSC Economics Economic Policies and Management Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press 1 The Global Economy Dot Point HSC Economics DOT POINT /…iÊ�œL>�Ê Vœ˜œ“Þ

Science Press 2 Dot Point HSC Economics The Global Economy Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press 3 The Global Economy Dot Point HSC Economics 1. International economic integration. 1.1 The global economy. Features of the global economy International economic integrationGross world product (GWP) GlobalisationInternational and regional business cyclesTransborder flows Protectionism and free tradeEconomic growth and economic developmentTrading blocs and agreementsEnvironmental sustainability Differences between nations 1.1.1 Identify FOUR (4) factors relevant to the global economy. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.1.2 Outline why it is important to classify nations as being advanced, developing and emerging. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.1.3 ,GHQWLI\7:2 EHQH¿WVRIJOREDOWUDGH ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.1.4 Identify the reason for nations wanting to trade in a global market. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... *URVVZRUOGSURGXFW 1.2.1 'H¿QHWKHWHUPµJURVVZRUOGSURGXFW¶ ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 4 Dot Point HSC Economics The Global Economy Use the information below and your own knowledge to answer the questions that follow. Features of the global economy in 2009-2010 2009 marked the ﬁrst year in the post-World War II era that global output – and per capita income – declined; output contracted nearly 1% year-over-year, compared with average increases of about 3.5% per year since 1946. And global trade plummeted nearly 25% from 2008’s level, the largest single year drop since World War II. Among major countries, the biggest GDP losses occurred in Russia (–7.9%), Mexico (–6.5%), Japan (–5.3%), Germany (–5.0%), United Kingdom (–4.8%), and Italy (–4.8%), while China (+8.7%), India (+6.5%), and Indonesia (+4.5%) recorded the biggest gains. In 2009, global per capita income fell about 2% to US$10 500, as global unemployment rose from just over 7% in 2008 to nearly 9% in 2009 – underemployment, especially in the developing world, remained much higher. World external debt dropped more than 6% from the previous year, as new international lending disappeared. The global recession was a result of widespread uncertainties in the ﬁnancial markets, bank failures, tighter credit, falling home prices, collapsing asset prices, lowered consumer conﬁdence, and the drop in trade. In response to these conditions, many, if not most, countries pursued expansionary monetary and ﬁscal policies, and attempted to avoid protectionist policies. By the second half of 2009, the global economy appeared to be making halting, but forward steps. The world economy now faces a major new challenge, together with several long-standing ones. The ﬁscal stimulus packages put in place in 2009 required most countries to run budget deﬁcits – government balances deteriorated for 14 out of every 15 countries. Treasuries issued new public debt – globally, worth about $4 trillion – to pay for the additional expenditures. To keep interest rates low, many central banks monetised that debt, injecting large sums of money into the economies. In early 2010, excess capacity existed in product markets, and inﬂation was not an immediate threat. However, when economic activity picks up, central banks will face the difﬁcult task of containing inﬂation without raising interest rates so high they snuff out further growth. Source: https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html; accessed on 28.07.2010. 1.2.2 Identify the source of the information provided above. ............................................................................................................................................................................................................................... 1.2.3 Identify SIX (6) nations which suffered a decline in GDP in 2009. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.2.4 Identify THREE (3) nations which experienced GDP growth in 2009. ............................................................................................................................................................................................................................... 1.2.5 Identify the cause of the global recession in 2008-2009. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 5 The Global Economy Dot Point HSC Economics 1.2.6 Identify and distinguish between the TWO (2) components of gross world product. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.2.7 Use the information below and your own knowledge to answer the questions that follow. 2007 (US $billion)2008 (US $billion)2009 (US $billion)2010 (US $billion) Advanced economies 36 615 38 115 –3.8% +0.6% Developing and emerging economies 29 585 31 454 +1.5% +4.7% World (purchasing power parities, PPP) 66 190 69 569 69 809 73 200 World (market exchange rates) 55 392 61 221 Sources: http://www.imf.org/external/pubs/ft/weo/2010/01/pdf/text.pdf and http://www.imf.org/external/pubs/ft/weo/2009/update/02/index. htm; both accessed on 29.07.2010 (a) Calculate the percentage increase in GDP between 2007 and 2008 for the following. Advanced economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Developing and emerging economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (b) Determine the value of GDP for each of the following. Advanced economies, GDP value 2009. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Advanced economies, GDP value 2010. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Developing and emerging economies, GDP value 2009. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Developing and emerging economies, GDP value 2010. ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 6 Dot Point HSC Economics The Global Economy 1.2.8 'H¿QHWKHIROORZLQJWHUPV Market exchange rates. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Purchasing power parity. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.3 Globalisation. Globalisation Protectionism and free tradeEconomic growth and economic developmentTrading blocs and agreementsEnvironmental sustainability Differences between nations 1.3.1 'H¿QHWKHIROORZLQJWHUPVUHOHYDQWWRJOREDOLVDWLRQ Protectionism. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Economic growth. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Trading bloc. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Environmental sustainability. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.3.2 %ULHÀ\GHVFULEHWKHJHQHUDOWUHQGLQWKHIROORZLQJWUDQVERUGHUÀRZVVLQFH:RUOG:DU,, Goods and services. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Labour. ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 7 The Global Economy Dot Point HSC Economics Foreign direct investment (FDI). ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.4 International and regional business cycles. Boom Upswing Downturn RecessionRecovery Time World gross domestic product ($) International business cycles 1.4.1 Outline features of each of the following aspects of the international business cycle, referring WRLQYHVWPHQWFRQVXPSWLRQEXVLQHVVDQGFRQVXPHUFRQ¿GHQFH VHQWLPHQW LQWHUHVWDQG employment levels. Boom. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Downturn. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Recession. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Recovery. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 1.4.2 Compare and contrast international and regional business cycles. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 8 Dot Point HSC Economics The Global Economy Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press 9 The Global Economy Dot Point HSC Economics 2. Trade, financial flows and foreign investment. 2.1 The basis of free trade. 2.1.1 Distinguish between comparative and absolute advantage. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.1.2 'H¿QHWKHWHUPWUDGHOLEHUDOLVDWLRQ ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.1.3 'H¿QHWKHWHUPIRUHLJQGLUHFWLQYHVWPHQW ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Use the information below and your own knowledge to answer the questions that follow. Global trends for FDI Global foreign direct investment (FDI) ﬂows began to bottom out in the latter half of 2009. This was followed by a modest recovery in the ﬁrst half of 2010. Global inﬂows are expected to pick up to over $1.2 trillion in 2010, rise further to $1.3 to $1.5 trillion in 2011, and head towards $1.6 to $2 trillion in 2012. The current recovery is taking place in the wake of a drastic decline in FDI ﬂows in 2009. After a 16% decline in 2008, global FDI ﬂows fell a further 37% to $1114 billion, while outﬂows fell some 43% to $1101 billion. FDI ﬂows contracted for almost all major economies, except for a few FDI recipients such as Denmark, Germany and Luxembourg. Source: UNCTAD World Investment Report 2010: Investing in the Low-Carbon Economy. 2.1.4 Outline the event that occurred over the period 2008-2009 which affected world economic growth. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.1.5 'HVFULEHWKHWUHQGLQJOREDOLQÀRZVDQWLFLSDWHGRYHUWKHSHULRG ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.1.6 Explain the relationship between FDI and globalisation. ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 10 Dot Point HSC Economics The Global Economy Use the information below and your own knowledge to answer the questions that follow. NationGlobal FDI Inﬂows 2008 (US $billion) 2009 (US $billion) United States 316 130 China 108 95 France 62 60 United Kingdom 91 46 Germany 24 36 India 40 35 Singapore 11 17 *OREDO)',LQÀRZVVHOHFWHGHFRQRPLHV81&7$':RUOG,QYHVWPHQW5HSRUW 2.1.7 For each of the following nations, calculate the percentage fall in FDI over the period 2008-2009. United States. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... China. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... France. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... United Kingdom. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.1.8 Account for the difference in FDI falls between China and India, and the United States and United Kingdom. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.1.9 Describe how economies such as those of Germany and Singapore grow whilst others decline. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 11 The Global Economy Dot Point HSC Economics 2.1.10 'H¿QHWKHWHUPWUDQVQDWLRQDOFRUSRUDWLRQ 71& ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.1.11 Referring to the quote below, outline the importance of TNCs for global and domestic employment. ‘An estimated 80 million workers were employed in TNC foreign afﬁliates in 2009, accounting for about 4% of the global workforce. The largest number of foreign-afﬁliate employees is now in China, with 16 million workers in 2008 accounting for 20% of the world’s total employees in foreign afﬁliates’. Source: UNCTAD 2010, Global Trends in FDI, p17. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Use the information below and your own knowledge to answer the questions that follow. Transnational corporations from China, the Russian Federation, India and Brazil are collectively known as BRIC. They have become dynamic investors and share the following common features: They have developed various ownership-speciﬁc advantages that allow them to be competitive in foreign markets as well as their own markets. In organising their expansion abroad, Brazilian, Chinese, Indian and Russian TNCs have sought to establish portfolios of locational assets as increasingly important sources of their international competitiveness. Initially, ﬁrms from BRIC expanded mainly into their own region, often into countries in which they had close cultural links. A growing number of TNCs have ventured further aﬁeld in search of new markets and resources. A large number of TNCs from BRIC are motivated by strategic considerations rather than short- term proﬁtability, reﬂecting the role of state-owned enterprises in the outward FDI of the group. The majority of Chinese TNCs are state-owned and some Brazilian, Indian and Russian TNCs are also state-controlled (Petrobras, ONGC Videsh and Gazprom, for instance). Many of the TNCs headquartered in BRIC have become truly global players as they possess brand names, management skills and competitive business models. Some of them are CITIC (China), Gazprom (Russian Federation), Vale SA (Brazil) and Tata (India). Source: UNCTAD Global Trends in FDI, pp. 6-7. 2.1.12 Identify the meaning of the term BRIC. ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 12 Dot Point HSC Economics The Global Economy 2.1.13 Describe the TNC trends arising from BRIC economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.2 Role of international organisations. -W%'"''$ () %$ - %'"$! -Inter$) %$"%$)', *$ - $ )) %$%## (( %$%' '$+"%&#$) -Inter$) %$" %*' '$ () %$ V' %*(' %$"$!( - ' $+"%&#$)$! - ( $+"%&#$)$! - $)'"$!%$)'" ' $))( - $)'"$!%() ' $))( -Easter$' $$)'" $! %$")' $"%( %+'$#$)%$%# %'*#( - *'%&$$ %$ - A - - - '%(*' - Inter$) %$"%'$ () %$($"%")' 2.2.1 Distinguish between United Nations bodies and government economic forums. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.2.2 Outline THREE (3) roles of the World Trade Organisation (WTO). ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.2.3 Identify the role and purpose of UNCTAD. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 13 The Global Economy Dot Point HSC Economics 2.2.4 Identify TWO (2) goals of the International Labour Organisation (ILO). ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Use the information below and your own knowledge to answer the questions that follow. World Bank The World Bank was established in 1944. The World Bank is a vital source of ﬁnancial and technical assistance to developing countries around the world. Its mission is to ﬁght poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors. We are made up of two unique development institutions owned by 187 member countries: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). International Bank for Reconstruction and Development (IBRD) The International Bank for Reconstruction and Development (IBRD) aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services.International Development Association (IDA) IDA is one of the largest sources of assistance for the world’s 79 poorest countries, 39 of which are in Africa. It is the single largest source of donor funds for basic social services in the poorest countries. IBRD and IDA share the same staff and headquarters and evaluate projects with the same rigorous standards. It is the single largest source of donor funds for basic social services in the poorest countries. IDA lends money (known as credits) on concessional terms. This means that IDA credits have no interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period. IDA also provides grants to countries at risk of debt distress. Sources: http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/0,,pagePK:50004410~piPK:36602~theSitePK:29708,00.html and http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/EXTIBRD/0,,menuPK:3046081~pagePK:64168427~piPK:64168435 ~theSitePK:3046012,00.html; accessed on 03.08.2010 2.2.5 Outline the role and importance of the World Bank. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 14 Dot Point HSC Economics The Global Economy 2.2.6 Outline the role and importance of the IBRD for poverty reduction. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.2.7 Outline the role and importance of the IDA for global economic development. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.3 Influence of government economic forums. European Union (EU) Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom. Economic Community Of West African States (ECOWAS) Benin, Burkina Faso, Cabo Verde, Cote d’Ivorie, Gambia, Ghana, Guinee, Guinee Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togoloese Republic.G7, G8 and G20 G7: Canada, France, Germany, Italy, Japan United Kingdom, United States. G8 = G7 + Russia. G20 = G8 + Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, Republic of Korea, European Union (EU) and Turkey. Association of South East Asian Nations (ASEAN) Burma, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam.Asia-Pacific Economic Cooperation (APEC) Australia, Brunei Darussalam, Canada, Chile, People's Republic of China, Hong Kong (China), Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, The Philippines, Russia, Singapore, Chinese Taipei, Thailand, The United States, Vietnam. North American Free Trade Agreement (NAFTA) Canada, Mexico and the United States of America. Mercosur (Southern Common Market) Argentina, Brazil, Paraguay, Uruguay.Government Economic Forums 2.3.1 Identify SEVEN (7) different government economic forums. ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 15 The Global Economy Dot Point HSC Economics 2.3.2 Use the information below and your own knowledge to answer the question that follows. The European Union (EU) The European Union aims to be a fair and caring society, committed to promoting economic prosperity and creating jobs by making companies more competitive and giving workers new skills. With its neighbours and others, the EU works to spread prosperity, democratic progress, the rule of law and human rights beyond its frontiers. The European Union is the world’s biggest trading power and a major donor of ﬁnancial and technical assistance to poorer countries. 6RXUFHKWWSHXURSDHXDEFNH\¿JXUHVLQGH[BHQKWPDFFHVVHGRQ Outline the role and importance of the European Union to globalisation and to fostering economic growth in member nations. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.3.3 Use the information below and your own knowledge to answer the questions that follow. Asia-Paciﬁc Economic Cooperation (APEC) Asia-Paciﬁc Economic Cooperation, or APEC, is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Paciﬁc region. APEC is the only intergovernmental grouping in the world operating on the basis of non-binding commitments, open dialogue and equal respect for the views of all participants. Unlike the WTO or other multilateral trade bodies, APEC has no treaty obligations required of its participants. Decisions made within APEC are reached by consensus and commitments are undertaken on a voluntary basis. APEC has 21 members – referred to as ‘Member Economies’ – which account for approximately 40.5% 1 of the world’s population, approximately 54.2% 1 of world GDP and about 43.7% 2 of world trade. 1 Sources: The APEC Region Trade and Investment 2008. 2 Sources: The APEC Region Trade and Investment 2008 World Trade [Trade in JRRGVDQGVHUYLFHV H[SRUWVLPSRUWV 6RXUFHKWWSZZZDSHFRUJDSHFDERXWBDSHFKWPO (a) Outline the role of APEC. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (b) Describe the importance of APEC to its member economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 16 Dot Point HSC Economics The Global Economy 2.3.4 Use the information below and your own knowledge to answer the questions that follow. ASEAN Established in 1967, the Association of Southeast Asian Nations (ASEAN) aims to accelerate economic growth, social progress and cultural development in the region and to promote regional peace and stability through the rule of law and adherence to the principles of the United Nations Charter. The ASEAN Charter, which entered into force on 15 December 2008, provides a legal and institutional framework to support the realisation of ASEAN’s objectives, including regional integration. ASEAN comprises ten countries: Burma, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam. ASEAN has ten Dialogue Partners: Australia, Canada, China, EU, India, Japan, New Zealand, Republic of Korea, Russia and the United States. The United Nations Development Program (UNDP) also has dialogue status. Source: http://www.dfat.gov.au/asean/index.html; accessed on 03.08.2010 (a) What do the letters ASEAN represent? ............................................................................................................................................................................................................................... (b) Describe the aims of ASEAN. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.3.5 Use the information below and your own knowledge to answer the questions that follow. The Economic Community Of West African States (ECOWAS) The Economic Community Of West African States (ECOWAS) is a regional group of ﬁfteen countries, founded in 1975. Its mission is to promote economic integration in ‘all ﬁelds of economic activity, particularly industry, transport, telecommunications, energy, agriculture, natural resources, commerce, monetary and ﬁnancial questions, social and cultural matters ...’ 6RXUFHKWWSZZZFRPPHFRZDVLQWVHFLQGH[SKS"LG DERXWBD ODQJ HQDFFHVVHGRQ (a) What do the letters ECOWAS represent? ............................................................................................................................................................................................................................... (b) Describe the aims of ECOWAS. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 17 The Global Economy Dot Point HSC Economics 2.3.6 Use the information below and your own knowledge to answer the questions that follow. North American Free Trade Agreement (NAFTA) The North American Free Trade Agreement (NAFTA) is a regional agreement between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America to implement a free trade area. Article 102 of the NAFTA states the following. The objectives of this Agreement, as elaborated more speciﬁcally through its principles and rules, including national treatment, most-favoured-nation treatment and transparency, are to: sEliminate barriers to trade in, and facilitate the cross-border movement of goods and services between the territories of the Parties. sPromote conditions of fair competition in the free trade area. sIncrease substantially investment opportunities in the territories of the Parties. sProvide adequate and effective protection and enforcement of intellectual property rights in each Party’s territory. sCreate effective procedures for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes. sEstablish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the beneﬁts of this Agreement. Source: http://www.nafta-sec-alena.org/en/view.aspx?x=283#What%20is%20the%20NAFTA; accessed on 03.08.2010 (a) What do the letters NAFTA represent? ............................................................................................................................................................................................................................... (b) Describe the SIX (6) aims of NAFTA. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 18 Dot Point HSC Economics The Global Economy 2.3.7 Use the information below and your own knowledge to answer the questions that follow. Group of 20 (G20) The Group of Twenty (G20) Finance Ministers and Central Bank Governors was established in 1999 to bring together systemically important industrialised and developing economies to discuss key issues in the global economy. The G20 is the premier forum for our international economic development that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability. By contributing to the strengthening of the international ﬁnancial architecture and providing opportunities for dialogue on national policies, international co-operation, and international ﬁnancial institutions, the G20 helps to support growth and development across the globe. 6RXUFHKWWSZZZFRPPHFRZDVLQWVHFLQGH[SKS"LG DERXWBD ODQJ HQDFFHVVHGRQ (a) What does the acronym G20 represent? ............................................................................................................................................................................................................................... (b) Describe the aims of the G20. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.3.8 Use the information below and your own knowledge to answer the questions that follow. Mercosur Mercosur, the ‘Common Market of the South,’ is the largest trading bloc in South America. Mercosur’s primary interest has been eliminating obstacles to regional trade, like high tariffs, income inequalities, or conﬂicting technical requirements for bringing products to market. Some countries, like Brazil, want to keep Mercosur focused on regional trade. Other countries, like Venezuela, which has yet to attain full membership in the bloc, would like to expand the group’s mandate to political affairs. The creation of a new regional organisation in 2008, the Union of South American Nations (Unasur), has raised further questions about Mercosur’s utility. The Mercosur trade bloc’s purpose, is to allow for free trade between member states, with the ultimate goal of full South American economic integration. The trade bloc’s ‘grand aspiration is to unify the Southern Cone and then all of South America in an economic bloc,’ says Katherine Hancy Wheeler, a research associate with the Council on Hemispheric Affairs. ‘It gives them more trading security.’ Mercosur’s full members include Argentina, Brazil, Paraguay, and Uruguay. Venezuela’s entry as a full member is still pending ratiﬁcation by Brazil and Paraguay. Brazil is the region’s largest economy with a gross domestic product (GDP) of over $1.6 trillion in 2008. Source: http://www.cfr.org/publication/12762/mercosur.html#p2 accessed on 03.08.2010 (a) What does the term Mercosur stand for? ...............................................................................................................................................................................................................................

Science Press 19 The Global Economy Dot Point HSC Economics (b) Describe the aims of Mercosur and identify its members. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.4 Trading blocs, monetary unions and free trade agreements. 2.4.1 'H¿QHWKHIROORZLQJWHUPVUHIHUULQJWRH[DPSOHV Trading blocs. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Monetary unions. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Free trade agreements. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.4.2 Describe the importance of trading blocs such as the EU and NAFTA to their member nations. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.4.3 With reference to the EU and the euro (€) explain the features of a monetary union. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.4.4 Outline TWO (2) features of a free trade agreement (FTA). ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 20 Dot Point HSC Economics The Global Economy 2.4.5 Use the information below and your own knowledge to answer the question that follows. Australia’s free trade agreements: sAustralia – New Zealand: ANZCERTA sSingapore – Australia: SAFTA sThailand – Australia: TAFTA sAustralia – United States: AUSFTA sAustralia – Chile FTA sASEAN – Australia – New Zealand Free Trade Area: AANZFTA sCurrent FTA negotiations: China, The Gulf Cooperation Council (GCC), Japan, Korea and Malaysia. The Government announced on 18 August 2009 that Australia would commence negotiations on a new regional trade and economic integration agreement with the Paciﬁc Forum. Known as the PACER Plus negotiations, these will involve Australia, the Cook Islands, the Federated States of Micronesia, Kiribati, Nauru, New Zealand, Niue, Palau, Papua New Guinea, the Republic of the Marshall Islands, Samoa, the Solomon Islands, Tonga, Tuvalu and Vanuatu. Australia’s primary objective with PACER Plus is a more sustainable and prosperous Paciﬁc. Source: http://www.daff.gov.au/market-access-trade/fta; accessed on 03.08.2010 ([SODLQWKHEHQH¿WVRI)7$VUHIHUULQJWR7:2 RI$XVWUDOLD¶VIUHHWUDGHDJUHHPHQWV ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 2.4.6 Use the information below and your own knowledge to answer the questions that follow. When trading blocs trade with trading blocs … The EU and the Mercosur group of South American countries relaunched talks on 17 May aimed at creating the world’s largest trading bloc. Discussions continued in Buenos Aires last week (29 June-2 July). The two blocs held nearly ﬁve years of talks between 1999 and 2004 over establishing a free-trade zone, but failed to reach an agreement partly due to differences over agriculture. Mercosur – Brazil, Argentina, Paraguay and Uruguay – and the 27-country EU will hold a ﬁrst round of talks in July 2010. 6RXUFHKWWSZZZHXUDFWLYFRPHQWUDGHHXWUDGHFKLHIWRXWVEHQH¿WVPHUFRVXUGHDOQHZVDFFHVVHGRQ (a) Explain the reason for the talks between the EU and Mercosur. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... E ,GHQWLI\WKHEHQH¿WVRIDQDOOLDQFHEHWZHHQWKH(8DQG0HUFRVXU ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 21 The Global Economy Dot Point HSC Economics 3. Protection. 3.1 Reasons for protection. Infant industries argument Protection from dumpingDefence and securityDomestic employment Reasons for protection 3.1.1 Identify FOUR (4) reasons for protection. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.2 Outline the infant industries argument as a means for justifying protectionism. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.3 Explain the effect that allowing foreign goods and services into a nation has on domestic labour. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.4 Use the information below and your own knowledge to answer the question that follows. Dumping and antidumping (AD) Dumping is the sale of goods in foreign markets at prices below those charged for comparable sales in the home market or that are below the cost of producing the goods. An antidumping duty is a special levy imposed on imported merchandise to protect an affected domestic industry from injury caused by sale of dumped goods in the importing country. Source: http://www.nafta-sec-alena.org/en/view.aspx?x=283#What%20is%20dumping Distinguish between dumping and antidumping. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 22 Dot Point HSC Economics The Global Economy 3.1.5 Describe how a nation’s markets can become vulnerable when subject to dumping. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.6 Explain the relationship between protectionism and defence and security. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.7 Use the information below and your own knowledge to answer the questions that follow. The Foreign Investment Review Board The Board examines proposals by foreign interests to undertake direct investment in Australia and makes recommendations to the Government on whether those proposals are suitable for approval under the Government’s policy. The main functions of the Board are: sTo examine proposals by foreign interests for investment in Australia and, against the background of the Government’s foreign investment policy. sTo make recommendations to the Government on those proposals. sTo advise the Government on foreign investment matters generally. sTo provide guidance to foreign investors so that their proposals may be in conformity with the policy. sTo monitor and ensure compliance with foreign investment policy. The Board’s functions are advisory only. Responsibility for the Government’s foreign investment policy and for making decisions on proposals rests with the Treasurer. 6RXUFHKWWSZZZ¿UEJRYDXFRQWHQWZKRDVS"1DY,' DFFHVVHGRQ (a) Outline the role of the Foreign Investment Review Board (FIRB). ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (b) Examine the effect of government discretion on decisions involving foreign investment in Australia. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 23 The Global Economy Dot Point HSC Economics 3.1.8 Identify the role of the Foreign Acquisitions and Takeovers Act 1975 (Cth) The Foreign Acquisitions and Takeovers Act 1975 (Cth) and the regulations: Foreign Acquisitions and Takeovers Regulations 1989 (Cth) ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.9 Examine the effect on innovation within the domestic economy that would follow the relaxing of protection. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.10 ([DPLQHWKHHIIHFWRQFKRLFHDQGHI¿FLHQF\LQWKHGRPHVWLFHFRQRP\WKDWZRXOGIROORZWKH relaxing of protection. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.11 ([SODLQZKDWLVPHDQWE\WKHWHUPµVWUXFWXUDOUHIRUP¶ZKLFKFDQDFFRPSDQ\WKHUHOD[LQJRI protection. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.1.12 Distinguish between unilateral and multilateral trade agreements as a means of managing the transition from a protected economy to one engaging in free trade. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 24 Dot Point HSC Economics The Global Economy 3.2 Methods of protection and the effects of protectionist policies. 3.2.1 List FIVE (5) different forms of protection. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.2.2 Describe how subsidies work to protect domestic producers. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.2.3 Explain why a government may impose a tariff on imported goods. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.2.4 On the graph below draw the effect of a tariff on imported goods. Price, P Quantity, Q Domestic supply Domestic demandWorld price, P w

Science Press 25 The Global Economy Dot Point HSC Economics 3.2.5 Use the information in the graph below to answer the following questions. Domestic demand Domestic supply Price, P Quantity, Q World price, P w 500 1500 1750 1500 2000 TariffP E PT PW Note: Not drawn to scale (a) On the graph mark the equilibrium price at $15, the tariff price at $10 and the world price at $5. (b) Calculate the amount that domestic producers would produce and the revenue they would earn at the world price. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (c) Calculate the amount that domestic producers would produce and the revenue they would earn at the new price with a tariff. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (d) Calculate the amount that international producers would supply and the revenue they would earn at the world price. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (e) Calculate the amount that domestic producers would produce and the revenue they would earn at the new price with the tariff imposed. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (f) Determine the value of the tariff generated for the government. ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 26 Dot Point HSC Economics The Global Economy 3.2.6 Explain the effect of local content rules on domestic and international producers. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.2.7 Outline how quarantine rules can act to restrict imports, referring to examples. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.2.8 Explain why a government may impose a quota on importers. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 3.2.9 Use the information below and your own knowledge to answer the questions that follow. The US-Australia FTA The agreement eliminates all US beef tariffs over time, with the previous in-quota tariff of 4.4 US cents/kg eliminated from 1 January 2005 and the 26.4 per cent over-quota tariff will be reduced to zero over 18 years. There is to be an 18-year phase out of the out-of-quota duty beginning in year 9, with one-third of the duty phased out in years 9-13 and the remainder in years 14-18. The Agreement also provides for increasing quota access during the 18 year tariff elimination period. From year 19, all Australian beef will be free to enter the US market without tariff or quota restrictions and subject only to a price-based safeguard. Source: http://www.daff.gov.au/market-access-trade/fta/ausfta; accessed on 03.08.2010. (a) What is an FTA? ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (b) Distinguish between a tariff and a quota. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (c) When will the quota on Australian beef imports to USA be lifted and what effect will this have on the US beef market? ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 27 The Global Economy Dot Point HSC Economics 4. Globalisation and economic development. 'LIIHUHQFHVEHWZHHQHFRQRPLFJURZWKDQGHFRQRPLFGHYHORSPHQW 4.1.1 Distinguish between economic growth and economic development. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.1.2 Classify the following as either a measure of economic growth (G) or a measure of economic development (D). sA 5% rise in gross domestic product. ( ) sUnemployment falling to 4.7%. ( ) sExpected life expectancy rising to 87-years for men. ( ) sThe number of doctors per 100 000 people rises from 53 to 67. ( ) sThe literacy rates for adult females is 68%. ( ) sA rising trend in foreign investment. ( ) sPer capita income falling by 3%. ( ) sThe fall in infant mortality rates from 4 in 10 000 to 3.2 in 10 000. ( ) sA rise in interest rates from 6% to 6.5%. ( ) sThe average annual national wage rising to $25 100 per person. ( ) sThe rate of internet and telephony coverage increasing to 87% nationally. ( ) sThe amount of foreign aid donated as a proportion of GDP is 0.00%. ( ) sGDP per capita falls by 2% to $33 030. ( ) sThe amount of energy consumed rises 5% to 3000 kwH per capita. ( ) s,QÀDWLRQUXQVDWSHUDQQXP sThe number of homes with running water at 66%. ( ) sFertility rates (births per woman) have remained at 7%. ( ) s30 new schools have been built nationally over the past year. ( ) sLevel of urbanisation has increased from 24% to 37% in the past 10 years. ( ) sCorruption perceptions index (as measured by Transparency International) ( ) is 0.93. sThe per capita rise in income over the past 3 years has been 5.4%. ( )

Science Press 28 Dot Point HSC Economics The Global Economy 4.1.3 With references to examples distinguish between low income, middle income and high income economies. Low income economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Middle income economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... High income economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.1.4 Use the information below and your own knowledge to answer the questions that follow. CountryGDP per capita ($US) 2009*GDP RankingLife expectancyHuman Development Index (HDI) /1.000HDI Ranking Qatar 68 872 3 75.5 0.910 33 United States 46 381 9 79.1 0.956 13 Australia 45 587 11 81.4 0.970 2 Poland 11 288 49 75.5 0.880 41 Malaysia 6897 67 74.1 0.828 66 Indonesia 2329 117 70.5 0.734 111 Vietnam 1060 137 74.3 0.725 116 Source: IMF and the Human Development Report 2009; *nominal values (a) Referring to TWO (2) economic indicators, describe the difference between nations that have a high level of economic development and those that have a low level of development. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (b) Outline the relationship between per capita incomes and HDI rankings. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 29 The Global Economy Dot Point HSC Economics 'LVWULEXWLRQRILQFRPHDQGZHDOWK Use the information below and your own knowledge to answer the questions that follow. Category NationGDP per capita ($US) 2007Population on below US$2 per day 2000-2007Gini coefﬁcient /100* Very high human developmentAustralia 34 923 - 35.2 Singapore 35 163 - 42.5 High human developmentPoland 11 072 < 2% 34.9 Mexico 9715 4.8% 48.1 Medium human developmentChina 2432 36.3% 41.5 Indonesia 1918 16.7% 39.4 Low human developmentTimor Leste 373 77.5% 39.5 Niger 294 76.1% 43.9 * 0 = absolute equality; 100 = absolute inequality 4.2.1 2XWOLQHWKHVLJQL¿FDQFHRIPHDVXULQJWKH*'3SHUFDSLWDRIQDWLRQV ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.2.2 Explain the importance of measuring the proportion of a population living on less than $2 per day. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.2.3 ([SODLQKRZWKH*LQLFRHI¿FLHQWLVVLJQL¿FDQWWRGHWHUPLQDWLRQVRILQFRPHGLVWULEXWLRQ ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.2.4 Describe the role of foreign aid in the alleviation of poverty. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.2.5 )URPWKHSRLQWRIYLHZRILQFRPHHTXDOLW\LVD*LQLFRHI¿FLHQWRIRU better? Explain your answer. ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 30 Dot Point HSC Economics The Global Economy 4.3 Income and quality of life indicators. Use the information below and your own knowledge to answer the questions that follow. Development classiﬁcationNationGDP per capita (PPP) 2007 ($US)HDI /1.000HDI RankingLife expectancy at birthProbability of NOT surviving to age 40 (% of cohort) Very high human developmentNorway 53 433 0.971 1 80.5 - Australia 34 923 0.970 2 81.4 - High human developmentBahrain 29 723 0.895 38 75.6 2.9% Chile 13 880 0.878 43 78.5 3.1% Mexico 14 104 0.854 54 76.0 5.0% Medium human developmentThailand 8135 0.783 86 68.7 11.3% Philippines 3406 0.751 105 71.6 5.7% Indonesia 3712 0.734 111 70.5 6.7% Low human developmentTimor Leste 717 0.489 162 60.7 18% Ethiopia 779 0.414 171 54.7 27.7% Niger 627 0.340 182 50.8 29% Source: Human Development Report 2009 4.3.1 List TWO (2) nations that have very high levels of human development. ............................................................................................................................................................................................................................... 4.3.2 List TWO (2) nations that have high levels of human development. ............................................................................................................................................................................................................................... 4.3.3 List TWO (2) nations that have medium levels of human development. ............................................................................................................................................................................................................................... 4.3.4 List TWO (2) nations that have low levels of human development. ............................................................................................................................................................................................................................... 4.3.5 Identify the various HDI cut off values for classifying nations as low, medium, high or very high development. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 31 The Global Economy Dot Point HSC Economics 4.3.6 Explain how life expectancy is a quality of life indicator. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.3.7 Describe the trend in the probability of not surviving to age 40 as the HDI value changes. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.3.8 Outline the relationship between GDP and life expectancy. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.3.9 Use the information below and your own knowledge to answer the questions that follow. Norway and Australia have over 30% of 25-year-olds receiving a tertiary education, whereas in Bahrain, Mexico and Chile the rates are below 15%. In Timor Leste, Ethiopia and Niger the rate is below 2.5%. Source: Human Development Report 2009 D 5HIHUULQJWRVSHFL¿FLQGLFDWRUVH[SODLQWKHUHODWLRQVKLSEHWZHHQLQFRPHVDQGHGXFDWLRQDO levels. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (b) Describe a relationship between investment in education and increased life expectancies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.3.10 Assess the value of compiling economic data on incomes and quality of life. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 32 Dot Point HSC Economics The Global Economy 4.4 Developing economies, emerging economies, advanced economies. Stages of economic development Developing economies Advanced economies Emerging economies 4.4.1 Identify THREE (3) characteristics of developing economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.4.2 Identify THREE (3) features of emerging economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.4.3 Outline THREE (3) characteristics of developed economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.4.4 Classify the following nations as developing (DVG), emerging (E) or developed (DD). sBrazil ( ) sChina ( ) sAustralia ( ) sTurkey ( ) sCanada ( ) sGermany ( ) sGhana ( ) sSweden ( ) sAfghanistan ( ) sVietnam ( ) sNew Zealand ( ) sMalaysia ( )

Science Press 33 The Global Economy Dot Point HSC Economics 5HDVRQVIRUGLIIHUHQFHVEHWZHHQQDWLRQV 4.5.1 'H¿QHWKHWHUPHQGRZPHQW ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.5.2 Explain the relationship between economic growth and economic development. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.5.3 'H¿QHWKHWHUPµWULFNOHGRZQ¶HIIHFW ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.5.4 Outline the importance of infrastructure investment on economic development. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.5.5 Describe the effect of industrialisation on each of the following. (a) Economic growth. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (b) Economic development. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.5.6 Outline the effect of saving on economic growth. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 34 Dot Point HSC Economics The Global Economy 4.5.7 Outline the effect of high population growth on emerging economies. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.5.8 'HVFULEHWKHEHQH¿WRIPLJUDWLRQIRUDGYDQFHGHFRQRPLHV ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 4.5.9 Use the information below and your own knowledge to answer the questions that follow. International rankNationCorruptions Perception Index (CPI) score /10No. of surveys used 1 New Zealand 9.4 6 3 Singapore 9.2 9 8 Australia 8.7 8 17 United Kingdom 7.7 6 18 United States 7.7 8 55 South Africa 4.7 8 56 Malaysia 4.5 9 79 China 3.6 9 84 India 3.4 10 111 Indonesia 2.8 9 178 Myanmar 1.3 4 6RXUFHKWWSZZZWUDQVSDUHQF\RUJSROLF\BUHVHDUFKVXUYH\VBLQGLFHVFSLFSLBBWDEOHDFFHVVHGRQ (a) Identify a relationship between level of economic development and corruption. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... (b) Describe the effect of corruption on economic growth and economic development. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 35 The Global Economy Dot Point HSC Economics (IIHFWVRIJOREDOLVDWLRQ Economic growth * !#!% * % * $ * & ##$"&$% $ * ! )%'$ *%#&%&#$ * %#$%#%$Economic development *$% "&%) * (!%) * %#) * % #%%) *$%#&% Env ironmental effects *% * $% #&% ! *$$% #$ &#$ Other effects * %#% %# *# $%# #%$ * &# %) * %#% '# Effects of globalisation 4.6.1 With reference to statistics and nations where relevant, describe the following effects of globalisation. Creation of trading blocs. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... The increasing trade in goods. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... The increasing trade in services. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Trends in foreign direct investment. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press 36 Dot Point HSC Economics The Global Economy The creation of bilateral and multilateral trade agreements. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Reduction in protectionism. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... 7UHQGVLQPLJUDWLRQDQGODERXUÀRZV ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... International convergence. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... Environmental impacts. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

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