AS & A Level / Economics / Trade, exchange rates and development Question practice
Trade, exchange rates and development About this practice Original, unofficial practice. Evaluative marking points are indicative: credit equivalent justified arguments, one point per distinct criterion, without double counting.
Accept equivalent valid methods and supported interpretations that address the task. Award each mark once; matching the model wording is not required.
Economics Trade, exchange rates and development
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1 Explain why a country with an absolute advantage in both goods can still gain from trade. Easy 2 marks No calculator + 2 Fictional case: one worker-day produces either 12 cloth or 6 grain in Aro, and either 8 cloth or 8 grain in Beni. Calculate each country's opportunity cost of one cloth and identify comparative advantage in cloth. Easy 3 marks Calculator + 3 Fictional case: the exchange rate changes from 2 local units per dollar to 2.5. A machine costs 400 dollars with its dollar price fixed. Calculate its local price before and after, the percentage increase, and identify the currency movement. Medium 4 marks Calculator + 4 Fictional case: a tariff on imported steel helps domestic steelmakers but local appliance producers use imported steel. Analyse effects on both industries and consumers. Medium 4 marks No calculator + 5 Fictional case: Lero relies on one crop export and proposes an infant-industry tariff for food processing. Evaluate the policy as a development strategy. Hard 4 marks No calculator + 6 Fictional case: Mavi depreciates its currency to improve the trade balance, but imports essential medicines and exporters rely on imported components. Evaluate the likely outcome over time. Hard 4 marks No calculator + Self-assessed Not marked yet
Set total 21
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