1. Distinguish between imports and exports. (2)
Imports are goods and services brought into a country from abroad while exports are those goods and services sold in other countries.
2. Using fig.105, what was Britain’s biggest export sector by value in 2013? (1)
In 2013 Britain’s biggest export sector by value was cars, amounting to 6.4% of total exports.
3. What is meant by the term Advanced Country (AC)? (1)
An Advanced Country is one defined by the International Monetary Fund as having well-developed financial markets, a diversified economy and a growing service sector.
4. What is meant by the letters GDP? (1)
GDP is an abbreviation for the economic term Gross Domestic Product, the value of goods, services and raw materials produced in a country each year.
5. Explain why GDP figures alone are not always sufficient to describe a nation’s economy. (4)
GDP refers to Gross Domestic Product, the value of goods, services and raw materials produced in a country each year. While for some countries this figure accurately describes economic artivity, for other countries such as Britain, which a fully integrated into the world economy, GDP does not tell the whole story.
Many transnational corporations, such as banks like HSBC or Barclays or oil companies (BP, Shell) create many of their profits abroad. These profits are counted as part of Britain’s Gross National Income (GNI) even though they are not part of the GDP as the economic activity occurred abroad.
6. Describe what is shown by the Gini index. (3)
The Gini index is a measure of income distribution within a country. Countries with a small gap between the richest and poorest sections of society such as Scandinavian countries have a low GINI (less than 0.3) while much more unequal societies such as Brazil or South Africa have Gini indexes higher than 0.6.
7. With reference to figures 103 and 104, discuss why Britain leaving the free trade area of the EU, after the ‘Brexit’ vote, may impact on Britain’s trading patterns. (6)
In 2015, 62% of Britain’s imports, worth around $400 billion, came from European countries. In the same year 58% of Britain’s exports worth around $260 billion were sold to European countries. Should ‘Brexit’ result in the imposition of trading tariffs between the EU and Britain then this trade could be significantly reduced. Britain may be able to increase its trade with non-EU countries. For example economically developing regions such as Asia only account for 20% of imports and 22% of exports. This could grow in the future as Chinese and Indian demand for British goods and services grow.
8. “Britain’s GDP hides an unequal society.” Discuss to what extent you agree with this statement. (6)
The total size of the UK economy makes it one of the richest nations on Earth (fifth largest economy in 2017). However, the annual GDP of $2,849 billion is not spread evenly across the whole nation, a GDP per capita of nearly $40,000 might suggest that everyone earns this amount each year. While on a global scale Britain is relatively equal, ranked 35th for equality using the Gini index that ranking hides a great disparity between the richest and poorest in society. In 2017, the poorest 10% of the UK population received less than 2% of the nation’s wealth, while the richest 10% received over 30% of the countries income. So while the UK may not be as unequal as many countries in Emerging and Developing Nations it still shows some significant inequalities and so that statement is correct.
9. “Britain’s economy is fully integrated in the global economy.” Discuss this statement. (6)
It is true that Britain’s economy is fully integrated into the world economy. Britain imports many cars but also exports different brands. This is also true of crude oil and petroleum products which Britain both imports and exports. Britain is reliant on imports for around 40% of the food we eat. In total Britain imported more from the rest of the world than the country sold, creating a ‘balance of trade’ deficit of nearly $200 million. It is not just goods which are bought and sold, London hosts one of the globes most important markets for banking and financial services, with some $1.85 trillion passing through the City of London every day.
10. Explain why Britain imports so many goods from China, despite it being so far away. (4)
In 2016 Britain imported $42 billion worth of goods from China (7% o0f the total). Many of these imports are lower value consumer goods such as clothing, toys, electronics, white goods, such as fridges, as well as more expensive items such a solar panels. The reason that these imports have grown in recent years is because of the lower costs of production in China. This makes the goods cheaper in the UK (despite EU tariffs) despite that large scale cost of shipping. In recent years the construction of super cargo ships carrying up to 20,000 containers has significantly reduced the costs of international transport.
11. When describing and comparing the economies of different countries why is the concept of purchasing power parity (PPP) useful? (4)
Many different countries have different currencies with constantly changing exchange rates. This makes comparison difficult. In addition, the cost of living in some countries is much cheaper than others or much more expensive than the global average. Again this makes comparison difficult. Purchasing power parity (PPP) adjusts the GDP figures for each nation to take into consideration the relative cost of goods and services. PPP then gives a comparative figure for GDP in US dollars. This allows for as more reasonable comparison between differing national economies.
12. With reference to figures 103 and 104, what percentage of UK trade took place European countries in 2015? (4)
In 2015, 62% of Britain’s imports, worth around $400 billion, came from European countries. In the same year, 58% of Britain’s exports worth around $260 billion were sold to European countries. The majority of The UK trade with Europe was with Western European countries accounting for 37% of imports and 36% of exports.
