69-ocrf585-june2011

69-ocrf585-june2011 - OCR A2 Economics Unit F585 - The...

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OCR A2 Economics Unit F585 - The Global Economy June 2011 Revision Toolkit
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OCR F585 Toolkit June 2011 (tutor2u) Page 2 Table of Contents Introduction . ........................................................................................................................................... 3 Extract 1: Recession in the euro area economies 2008 – 2009 . ............................................................. 5 Extract 2: Portugal, Italy, Ireland, Greece and Spain – the PIIGS . ......................................................... 20 Extract 3: The future of the Spanish economy . .................................................................................... 29 Extract 4: International trade, international trade negotiations and developing economies . ............. 39 Suggested exam-style questions . .......................................................................................................... 47 Glossary of Key Terms for F585 The Global Economy . ......................................................................... 51
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OCR F585 Toolkit June 2011 (tutor2u) Page 3 Introduction This is the introductory section of the pre-release material – we will look at some of the concepts and issues flagged up by this introduction in the right-hand column below. Recession in the Euro Area The euro area economies all experienced negative economic growth during 2008 – 2009 as the global economic crisis spread. However, the reduction in GDP was not uniform. Some euro area economies entered recession earlier than others, some experienced more severe recessions than others and not all economies had emerged from recession by the end of 2009. The lack of convergence of the economic cycles in the euro area raised questions about the viability of the monetary union which was just over 10 years old. Comments on the introduction Definition of a recession: A marked slowdown in economic activity, more strictly defined (in many countries) as at least two consecutive quarters of declining real GDP The economic / business cycles of the seventeen countries inside the Euro Zone are not fully convergent. The timing of recession and recovery has been different as has the depth of the downturn and the strength of the rebound in demand, output and employment In macroeconomics, convergence normally refers to the process by which the per capita income of a relatively poor country catches up with that of a richer country. But it is also used in the context of convergence of inflation rates, interest rates and real measures such as economic growth, productivity and trade patterns. Shifting competitiveness It was not just the lack of convergence of the economic cycles which raised concerns about the future of monetary union in the European Union (EU). A number of economies appeared to suffer from a lack of competitiveness both inside and outside the euro area. Portugal, Ireland, Italy, Greece and Spain (dubbed the PIIGS) had grown increasingly uncompetitive
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69-ocrf585-june2011 - OCR A2 Economics Unit F585 - The...

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