Economics For The IB Diploma 3rd Edition Ellie Tragakes, Peter Rock-Lacroix - Solutions

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Outline why some observers refer to the competition between developing countries to attract MNCs as the 'race to the bottom'.
Discuss advantages and disadvantages of MNCs in developing countries.
Outline characteristics of developing countries that MNCs look for when deciding where to invest. b Suggest why low-income countries receive negligible amounts of foreign direct investment. c Outline what factors account for the massive growth in foreign direct investment in developing countries in
Describe foreign direct investment (FDI) and multinational corporations (MNCs). b Explain why MNCs have an interest in expanding into developing countries. c In view of their relatively small share in total private investment in developing countries, explain why MNCs are a highly controversial
Examine how the contributions of a education programmes, b health programmes, and c provision of infrastructure can contribute to economic growth and development.
Discuss how a tax policies, b transfer payments, and c minimum wages can be used to redistribute income.
Discuss the effects of liberalising policies on export growth, diversification, economic growth and income distribution.
a Define trade liberalisation, referring to its objectives. b Outline the main ideas behind the market-based policies recommended for developing countries. c Explain the connections between the market-based supply-side policies discussed in Chapter 12. and the Washington Consensus.
Explain how social enterprise can contribute to economic development.
Explain how diversification can help a country grow and develop.
Outline the benefits that a country can expect from expanding into higher value- added production.
Explain why each of the following is a barrier to developing countries' efforts to grow and develop: a the informal economy b capital flight cindebtedness d the geography of landlocked countries e tropical climates and endemic diseases.
Identify a country that has already begun to be affected by global warming. Research the potential consequences.
To what extent should developed countries take responsibility for measures to correct the problems of global warming?
Explain why poor countries in warmer climates tend to face heavier consequences of global warming.
a Using a diagram explain the poverty cycle. b Outline how the poverty cycle is transmitted from generation to generation. C Explain why external intervention is necessary to break out of this cycle.
Use the PPC model to a show how a country can experience growth without economic development, b show how it can achieve some economic development without economic growth, and c explain why economic development over long periods of time requires economic growth.
a Explain why it is easier to measure economic growth than economic development. b Identify some difficulties involved in measuring economic development.
Identify one or more countries that manage their exchange rate and research the causes and consequences of exchange rate management.
Identify and research a country with a persistent current account deficit that uses or has used expenditure switching or expenditure reducing policies. Discuss the consequences of these policies.
Identify and research a country that has a serious and persistent current account deficit. How did this deficit come about? Try to identify some of the consequences of this deficit in the domestic economy. Is the government or central bank taking measures to reduce this deficit; if so what are
Explain why the price elasticities of demand (PEDS) for imports and exports are important in determining what will happen to a country's trade balance following a devaluation or depreciation of the domestic currency.
Discuss advantages and disadvantages of a expenditure reducing, b expenditure switching policies, and c supply-side policies as methods to correct a persistent current account deficit.
Discuss some problems faced by countries that have a a current account deficit and a financial account surplus, and b a current account surplus and a financial account deficit.
Evaluate alternative methods that the SBP of government of Pakistan can pursue to correct the current account deficit.
Discuss the implications of Pakistan's current account deficit for the Pakistani economy.
Using an appropriate diagram explain why the value of the rupee would have fallen if the SBP had not intervened.
Using an appropriate diagram explain one possible reason that accounts for the widening trade deficit in Pakistan after the depreciation of the rupee.
Using a PPC diagram draw two points illustrating a where Pakistan could possibly be producing, and b where Pakistan could possibly be consuming.
Referring to the concepts of debits and credits in the balance of payments, explain how two factors contributed to creating a zero balance in Pakistan's balance of payments.
The text states that an alternative to using foreign exchange reserves to maintain the value of the rupee would have been for the SBP to increase interest rates. a Using an AD-AS diagram, identify what kind of monetary policy this is and show the likely effects of rising interest rates on the
Explain how overvaluation of the rupee contributed to a lowering the rate of inflation, and b a widening trade deficit.
Use an exchange rate diagram to explain how the SBP succeeded in maintaining a stable value of the rupee in relation to the US dollar.
Explain how Greece's experience illustrates the disadvantages of monetary union.
Use a circular flow diagram and the concepts of leakages injections to show why running a budget surplus by the government leads to contraction of the economy.
Use a PPC diagram to show the effects of emigration of young people on Greece's future growth prospects.
Explain why a common currency can be interpreted as being 'undervalued' for countries with trade surpluses and 'overvalued' for countries with trade deficits.
a Explain how economic growth helps countries lower their debt-to-GDP ratio. b Using an AD-AS diagram, explain why contractionary policies make it more difficult to lower the debt-to-GDP ratio.
(Optional) Describe some arguments in favour of and against managed exchange rates.
Discuss the advantages and disadvantages of fixed and floating exchange rate systems.
Choose one or more countries that are major trading partners of the country you live in. Does your country of residence have a current account surplus or deficit with this country or countries? To what extent is the current account surplus or deficit due to a trade surplus or deficit? Are there are
Select a country you are interested in that has a managed exchange rate. Try to identify the objectives of the government or central bank intervention in the foreign exchange market to manage the exchange rate; is intervention intended to lead to currency appreciation or depreciation relative to
Select a country you are interested in and examine how the exchange rate of its currency has developed over the course of the last several years, noting when it has been appreciating and when it has been depreciating. Try to identify the most important factors that have led to exchange rate
Using the balance of payments accounts for Lakeland appearing in Test your understanding 16.8, draw a PPC diagram to show how much Lakeland is consuming in relation to how much it is producing. Explain why current account deficits are likely to be roughly matched by financial account surpluses, and
Explain the relationship between the current account, capital account and financial account.
Explain why a a trade surplus means that a country is consuming less than it is producing b a trade deficit means that a country is consuming more than it is producing.
Explain, providing examples, a the four components of the current account, b the two components of the capital account, and c the four components of the financial account. a Outline the meaning of a 'deficit' and a 'surplus' on an account. Explain in terms of debits and credits. b Explain the
a Define debits and credits, relating these to the demand for or supply of a currency in the foreign exchange market. b Provide some examples of money flows into and out of the country where you live, and explain whether these are credits, or debits.
Define the balance of payments. Describe its role.
Research and find one or more countries that peg their currency to another currency. Based on your findings, determine the reasons for the peg. Describe the advantages and disadvantages of the pegged currency in your example.
a Explain why overvalued and undervalued exchange rates do not arise in a freely floating exchange rates system. b Outline why undervalued currencies are sometimes referred to as a 'dirty float'.
a Distinguish between overvalued and undervalued exchange rates. b State the reasons for overvaluing or undervaluing a currency. Outline the disadvantages of each.
Outline the meaning of pegging a currency in the context of the managed float system.
Describe the reasons for government intervention in a managed float.
a In what ways is the managed float an exchange rate system that lies between fixed and floating exchange rate systems? b Outline why is it closer to floating exchange rates.
Using your knowledge about fixed exchange rates, discuss some advantages and disadvantages of the HKMA pegged exchange rates.
Use an exchange rate diagram to explain how the HKMA is able to keep the Hong Kong dollar pegged to the US dollar within the narrow band of ten cents by use of a interest rates, and b foreign exchange reserves.
Outline why it is easier to maintain a fixed exchange rate when there are upward pressures on the value of a currency than when there are downward pressures.
Distinguish between a depreciation and devaluation, and b appreciation and revaluation.
a Distinguish between devaluation and revaluation. b When is each of these undertaken by a government?
a Using a diagram, explain some methods that central banks and governments can use to maintain a fixed exchange rate. b Why do each of these lead to problems?
Describe a fixed exchange rate system.
Investigate how the value of the rupee has changed since 2018. Determine whether the rupee has depreciated further, or if it has appreciated, and examine the factors behind the changes.
Discuss the likely effects of rupee depreciation on growth, unemployment, the current account balance, foreign debt and standards of living.
Using AD-AS diagrams, explain the effects of rupee depreciation on a demand-pull inflation, and b cost-push inflation.
Using an exchange rate diagram and evidence from the text, explain the effects on the Indian rupee of higher interest rates in the United States.
a Using the table below, determine which currency appreciated, and which depreciated from the 1st to the 30th of September.
November 1. British pound was worth US $1.60. a Identify which currency appreciated and which depreciated. b Calculate the percentage appreciation of the appreciating currency. c Calculate the percentage depreciation of the depreciating currency.
British pound was worth US $1.46; on
June 2010,
On
Canadian dollars. Using the exchange rates in question 1, find its price in a US dollars, and b British pounds.c. What is the cost of 5000 units of item Y in dollars and pounds?
The price of item Y in Canada is
Indian rupees. Using the exchange rates in question 1, find its price in a Japanese yen, and b Sri Lanka rupees. c Importers in Japan and Sri Lanka want to import 1000 units of item X. Calculate their price in yen and rupees, respectively.
The price of item X in India is
British pound- 1.62 Canadian dollars. Calculate the value of 1. Canadian dollar in terms of British pounds.
Japanese yen 1.34 Sri Lanka rupee. Calculate the value of 1. Sri Lanka rupee in terms of Japanese yen. d
Indian rupee 1.84 Japanese yen. Calculate the 'price' of 1. Japanese yen in terms of Indian rupees. => c
Canadian dollar = 0.99 US dollar. Calculate the value of 1. US dollar in terms of Canadian dollars. = b
Some of the items appearing in Table 16.1 give rise to changes in both demand and supply of the same currency. Identify what these are and explain why both currency demand and supply are affected.
For each of the following events, draw exchange rate diagrams and show how a shifting currency demand or supply curve causes an appreciation or depreciation of the currency: a An increase in interest rates in the United States relative to the rest of the world; show the impact on the US dollar and
Suppose the United States would like to increase its imports from euro zone countries. Using diagrams, show the effects on a the value of the US dollar, and b the euro. c State which currency will appreciate and which will depreciate.
Define appreciation and depreciation of a currency.
Explain how each of the following affects the demand or supply of the US dollar: a An investor from the United States invests in the stock market of Brazil. b A Peruvian importer buys goods from the United States. CA US resident travels to China as a tourist. d The United States contributes to
Explain how exchange rates are determined in a floating exchange rate system.
State why exchange rates are measured in terms of the quantity of another currency.
Examine the most recent developments regarding the WTO's role in resolving disputes. Have there been any new appointments to the Appellate Body? What are the prospects for this role of the WTO? What possible factors might be leading to the developments?
Since the time of writing of this book, the trade war that began in early 2018 between the United States and several other countries is likely to have evolved. Examine the current situation: was the trade war resolved with tariffs gradually being phased out; did it escalate with more tariffs being
Examine whether the country you live in is a member of one or more trading blocs. Examine, too, whether it is currently in the process of negotiating the formation of or entry into a new trading bloc. In each case, what form of integration is involved: free trade agreement, customs union or common
Explain some challenges faced by the WTO.
What are some criticisms of the WTO?
What are some positive contributions of the WTO to the global trading system?
What are the objectives of the World Trade Organization (WTO)?
Up to the time of Brexit, numerous studies had tried to predict the economic effects that this would have. Most of these were pessimistic but highly variable, predicting mildly negative to very strongly negative effects. Investigate the effects that Brexit has had on the UK economy by examining?
Explain the difference between nominal and real incomes. Using the information in the text explain why real incomes in the United Kingdom have been falling.
Using an appropriate diagram explain why the drop in the pound created inflationary pressures in the United Kingdom.
Distinguish between membership in the European Union and membership in the European Monetary Union.
Using the information in the text, evaluate the likely effects of AfCFTA on the economies of the member countries.
(HL only) Suppose one AFCFTA member country has an absolute advantage over another AfCFTA member country in the production of all goods. a Using a diagram, explain under what conditions it may still be possible for both countries to gain from trade. b Under what circumstances might specialisation
Why are some of the member countries' fearful of integration? Identify and explain their concerns.

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Economics For The IB Diploma 3rd Edition Ellie Tragakes, Peter Rock-Lacroix - Solutions

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