The global economy

Paper labels are an unofficial, independently authored grouping, applied only where a question's own format genuinely matches a real paper convention (such as IB Mathematics AA's non-calculator/calculator split). They do not reproduce any exam board's real paper numbering or mark allocation, and uncertain questions are labelled general practice instead.

• 1The currency of Country X appreciates significantly against major trading partners' currencies. (a) Explain the likely effect of this appreciation on the price of Country X's exports in foreign markets. (b) Explain the likely effect on the volume of Country X's exports, assuming demand for its exports is price elastic.Paper 1 styleMedium4 marksNo calculator+
• 2Marking analysis: A learner attempts the following task: “The currency of Country X appreciates significantly against major trading partners' currencies. (a) Explain the likely effect of this appreciation on the price of Country X's exports in foreign markets. (b) Explain the likely effect on the volume of Country X's exports, assuming demand for its exports is price elastic.” Their response addresses only this point: “Explains that appreciation makes Country X's goods more expensive in foreign-currency terms for trading partners.” Evaluate the response against the complete 4-mark task. Identify what earns credit and state every additional requirement needed for full marks.Marking analysisMedium4 marksNo calculator+
• 3A country records the following for one year: trade in goods balance −$40bn, trade in services balance +$15bn, primary income balance −$5bn, secondary income balance +$2bn. (a) Calculate the current account balance. (b) State whether the country has a current account deficit or surplus. (c) Suggest one policy a government could use to address a persistent current account deficit. (d) Explain one possible drawback of that policy.Paper 2 styleMedium5 marksCalculator+
• 4Marking analysis: A learner attempts the following task: “A country records the following for one year: trade in goods balance −$40bn, trade in services balance +$15bn, primary income balance −$5bn, secondary income balance +$2bn. (a) Calculate the current account balance. (b) State whether the country has a current account deficit or surplus. (c) Suggest one policy a government could use to address a persistent current account deficit. (d) Explain one possible drawback of that policy.” Their response addresses only this point: “Sums the four balances: −40 + 15 − 5 + 2.” Evaluate the response against the complete 5-mark task. Identify what earns credit and state every additional requirement needed for full marks.Marking analysisMedium5 marksNo calculator+
• 5The nominal exchange rate between Country A and Country B is 4 units of Country A's currency per 1 unit of Country B's currency. A basket of goods costs 200 units of Country A's currency in Country A, and 40 units of Country B's currency in Country B. (a) Calculate the price of Country B's basket in Country A's currency, using the nominal exchange rate. (b) State whether the basket is cheaper in Country A or Country B once converted to the same currency. (c) Based on purchasing power parity theory, state what this suggests about the value of Country A's currency relative to Country B's currency. (d) Explain one real-world reason exchange rates might not adjust quickly to eliminate this difference.Paper 3 style (extended)Hard6 marksCalculator+
• 6Marking analysis: A learner attempts the following task: “The nominal exchange rate between Country A and Country B is 4 units of Country A's currency per 1 unit of Country B's currency. A basket of goods costs 200 units of Country A's currency in Country A, and 40 units of Country B's currency in Country B. (a) Calculate the price of Country B's basket in Country A's currency, using the nominal exchange rate. (b) State whether the basket is cheaper in Country A or Country B once converted to the same currency. (c) Based on purchasing power parity theory, state what this suggests about the value of Country A's currency relative to Country B's currency. (d) Explain one real-world reason exchange rates might not adjust quickly to eliminate this difference.” Their response addresses only this point: “Converts Country B's basket: 40 × 4 = 160 units of Country A's currency.” Evaluate the response against the complete 6-mark task. Identify what earns credit and state every additional requirement needed for full marks.Marking analysisHard6 marksNo calculator+