Original, AI-authored English practice with worked guidance. Selected topics only; independent teacher review is pending. This is not a complete syllabus, official past-paper collection or predicted exam score. Check your own exam-board specification: these concepts are not certified against a particular board or exam year.
72 original questions across 13 selected topic areas. No account or payment required to practise.
5 questions in this topic. Exact English revisions checked in an AI-assisted academic review; independent teacher approval is still pending.
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Original targeted practice for selected 2027 content; indicative answers, not complete syllabus coverage or teacher approval.
Selected subtopics: Accounts and currency regimes · Development finance · Integration and pricing
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Question 1Fictional external accounts in millions: goods/services exports100, imports130, net primary income-5 and net secondary income+10. Compute the current-account balance. Assume zero capital account and errors; explain the offset if the financial account is reported as net capital inflow.4 indicative marks
Fictional external accounts in millions: goods/services exports100, imports130, net primary income-5 and net secondary income+10. Compute the current-account balance. Assume zero capital account and errors; explain the offset if the financial account is reported as net capital inflow.
Cambridge 2027: Direct conceptual match
Recomputed-30,-25,+25 under explicit sign convention and avoided equating accounting balance with external sustainability.
Add income and transfers as well as trade. A trade deficit30 differs from the current deficit25. Financial-account signs differ between presentations, so the question explicitly adopts net inflows as positive; do not import the opposite acquisition-minus-liability convention without changing the explanation.
Self-marking points
Trade balance=100-130=-30 million.
Current account=-30-5+10=-25 million.
Under the stated net-inflow convention, a25 million financial inflow offsets the current deficit when other accounts are zero.
An accounting offset does not itself show whether the financing is sustainable or whether residents' welfare improved.
Examiner tip
Always state the financial-account sign convention.
Question 2Fictional country pegs its currency at2 local units per dollar but market pressure would otherwise weaken it. Explain the central bank's reserve action and a constraint. Then explain why devaluing the peg need not immediately improve the trade balance.4 indicative marks
Analyse / Explain4 indicative marksNo calculator
Fictional country pegs its currency at2 local units per dollar but market pressure would otherwise weaken it. Explain the central bank's reserve action and a constraint. Then explain why devaluing the peg need not immediately improve the trade balance.
Cambridge 2027: Direct conceptual match
Verified reserve transaction direction and temporal price/quantity distinction without claiming a guaranteed J-curve.
Buying the domestic currency supports its demand; buying dollars would do the opposite at the peg. A new official rate is devaluation, distinct from market depreciation. The Marshall-Lerner elasticity result needs its assumptions; lags and inelastic essential imports can delay or prevent an improvement.
Self-marking points
To support the currency the bank sells foreign reserves and buys its own currency.
Finite reserves and conflicting interest-rate/domestic objectives can constrain defence of the peg.
Devaluation raises local-currency import prices while contractual quantities may initially change little.
Later improvement depends on export/import quantity responsiveness, productive capacity and imported-input costs; a J-curve is a possible path, not a guarantee.
Examiner tip
Separate devaluation of a peg from depreciation of a floating rate.
Question 3Fictional economies A and B have equal real GNI per person at purchasing-power parity. A has poorer school completion, worse child survival and more unequal income. Explain why equal income does not establish equal development, and evaluate a conditional infrastructure aid loan to A.4 indicative marks
Analyse / Explain4 indicative marksNo calculator
Fictional economies A and B have equal real GNI per person at purchasing-power parity. A has poorer school completion, worse child survival and more unequal income. Explain why equal income does not establish equal development, and evaluate a conditional infrastructure aid loan to A.
Cambridge 2027: Direct conceptual match
Source-backed gap in development measures, aid/debt; all country conditions are fictional and no composite-index value is invented.
Equal averages cannot cancel the supplied differences in health, education or distribution. A loan may be more sustainable than inaction if it funds a productive bottleneck, but it is not a grant and foreign-currency service can rise after exchange-rate changes. State the needed evidence rather than assigning a fabricated HDI score.
Self-marking points
Average purchasing-power income omits distribution and the stated education/health differences.
A composite indicator can add dimensions, but its selection, weights and national averages still constrain interpretation.
Useful infrastructure can raise access and capacity if local skills, maintenance and governance support it.
Loan service, foreign-currency exposure and poorly matched conditions can burden A; compare expected social benefits with affordable repayments and alternatives.
Examiner tip
Do not calculate an HDI without its component indices and the specified method.
Question 4Fictional country can import a good from efficient outsider C at unit cost8 or partner B at10. Before a customs union it levies tariff4 on both. After union formation it removes B's tariff but keeps C's. Identify the sourcing change and explain trade diversion versus trade creation, assuming no transport costs.4 indicative marks
Fictional country can import a good from efficient outsider C at unit cost8 or partner B at10. Before a customs union it levies tariff4 on both. After union formation it removes B's tariff but keeps C's. Identify the sourcing change and explain trade diversion versus trade creation, assuming no transport costs.
Cambridge 2027: Direct conceptual match
Checked12/14 then12/10, real-cost ranking and customs-union distinction; no unsupported quantitative welfare total.
Calculate tariff-inclusive prices to predict the choice, then compare untaxed production costs to classify it. Removing4 from B changes its price14 to10, but does not make B's real cost lower than C's8. A customs union also has a common external tariff; it is not merely a free trade area.
Self-marking points
Before union C costs12 delivered after tariff and B14, so buyers choose C.
After union B costs10 while C remains12, so buyers switch to B.
This is trade diversion: preference shifts purchases to a higher real-cost supplier(10 rather than8).
Consumers pay less, but that alone does not establish net welfare gain because tariff revenue and resource-cost changes matter; trade creation instead replaces higher-cost domestic production with cheaper partner imports.
Examiner tip
A lower consumer price is not proof that resource allocation improved.
Question 5Fictional railway can prevent ticket resale and separates commuter and leisure markets. Commuter demand is less price elastic over the relevant range. Explain the conditions for third-degree price discrimination and why charging commuters more is conditional rather than a moral or universal pricing rule.4 indicative marks
Analyse / Explain4 indicative marksNo calculator
Fictional railway can prevent ticket resale and separates commuter and leisure markets. Commuter demand is less price elastic over the relevant range. Explain the conditions for third-degree price discrimination and why charging commuters more is conditional rather than a moral or universal pricing rule.
Cambridge 2027: Direct conceptual match
Checked third-degree segmentation/arbitrage conditions and qualified inverse-elasticity markup logic; no fare invented.
This is different prices for distinguishable groups rather than an individual willingness-to-pay auction. The elasticity argument concerns markups over relevant marginal costs, not a guaranteed ranking of absolute prices regardless of costs. Explain feasibility and evaluate consequences separately.
Self-marking points
The seller needs market power and distinguishable customer groups with different demand responses.
Resale/arbitrage must be limited or cheaper tickets undermine segmentation.
A profit-maximising pattern can imply a higher markup in the less elastic market when relevant costs and demand conditions support it.
Capacity, marginal costs, access objectives and consumer effects can change the judgement; group labels alone do not determine an optimal fare.
Examiner tip
Price discrimination is not defined as any difference caused by different supply costs.
