Government objectives and policies

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Government objectives and policies by Mind Map: Government objectives and policies

1. Imports

1.1. products/services that are brought into the country, having been produced in another country.

2. Exports

2.1. products/services that are produced in the country ,but are sold to consumers in foreign countries.

3. Balance of Trade

3.1. Visible Trade

3.1.1. trade in physical goods, e.g. oil, food, electronics

3.2. Invisible Trade

3.2.1. trade in services, e.g. money from tourism, transport services, financial services

3.3. Balance of Payments

3.3.1. is the difference between the total flow of money coming in and going out of the country over a period of time.

3.3.1.1. made up of :

3.3.1.1.1. Balance of Trade = Visible Exports – Visible imports Balance of Invisible Trade = Invisible exports – invisible imports

4. Exchange rates

4.1. shows the value (price) of one currency in terms of another currency.

4.2. Exchange Rate Appreciation

4.2.1. The value of the currency increases

4.3. Exchange Rate Depreciation

4.3.1. The value of the currency decreases

5. International competitiveness

5.1. the ability of a country / firm to provide products at better value (cheaper) than overseas competitors.

6. Business and the International Economy (appreciates)

6.1. Price of Exports

6.1.1. IF CURRENCY APPRECIATES (exchange rate rises)

6.1.1.1. Exports becomes more expensive overseas which leads to a decrease in demand

6.2. Price of Imports

6.2.1. IF CURRENCY APPRECIATES (exchange rate rises)

6.2.1.1. Imports become cheaper which leads to an increase in demand from overseas

6.3. Impact on Exporting Businesses (competitiveness and profits)

6.3.1. IF CURRENCY APPRECIATES (exchange rate rises)

6.3.1.1. Businesses that sell goods overseas will be negatively affected. The higher price makes their exports less describable, hence the business is less competitive.

6.4. Impact on Importing Businesses (competitiveness and profits)

6.4.1. IF CURRENCY APPRECIATES (exchange rate rises)

6.4.1.1. If a business imports (e.g. raw materials) it is positively affected as the price of raw materials will decrease.

7. Business and the International Economy (Depreciates)

7.1. Price of Exports

7.1.1. IF CURRENCY DEPRECIATES (exchange rate falls)

7.1.1.1. Exports become cheaper overseas leading to an increase in demand

7.2. Price of Imports

7.2.1. IF CURRENCY DEPRECIATES (exchange rate falls)

7.2.1.1. Imports become more expensive leading to a decrease in demand

7.3. Impact on Exporting Businesses (competitiveness and profits)

7.3.1. IF CURRENCY DEPRECIATES (exchange rate falls)

7.3.1.1. Businesses that sell goods overseas will be positively affected. Their exports are now cheaper and thus more desirable. The business is more competitive. It will likely sell more and make more profit.

7.4. Impact on Importing Businesses (competitiveness and profits)

7.4.1. IF CURRENCY DEPRECIATES (exchange rate falls)

7.4.1.1. If a business imports (e.g. raw materials) it is negatively affected as the price of raw materials will increase.