Economics
International trade and development — Syllabus topics 5-6
- 1.
Country X can produce 100 units of wheat or 50 units of cloth with its resources. Country Y can produce 60 units of wheat or 80 units of cloth with the same resources. Which country has an absolute advantage in wheat production? A Country X B Country Y C Both equally D Neither
[1 mark] · no calculator - 2.
Using the figures above (Country X: 100 wheat or 50 cloth; Country Y: 60 wheat or 80 cloth), calculate the opportunity cost of producing one unit of wheat in each country, and state which country has a comparative advantage in wheat.
[4 marks] - 3.
A government imposes a tariff on imported steel. What is the most likely effect on the domestic market for steel? A The domestic price falls and imports rise B The domestic price rises and imports fall C Domestic producers' output falls D Foreign producers' costs fall
[1 mark] · no calculator - 4.
Explain one benefit to consumers of international trade.
[2 marks] · no calculator - 5.
A government wants to protect its domestic car industry from foreign competition. Analyse two methods, other than a tariff, that it could use.
[4 marks] · no calculator - 6.
Explain how an increase in demand for a country's exports is likely to affect the external value of its currency under a floating exchange rate system.
[3 marks] · no calculator - 7.
Analyse how an appreciation of a country's currency is likely to affect its consumers who buy imported goods.
[4 marks] · no calculator - 8.
Explain the difference between economic growth and economic development.
[3 marks] · no calculator - 9.
Explain one benefit a developing country could gain from a large foreign company building a factory there through foreign direct investment (FDI).
[2 marks] · no calculator - 10.
Explain what is meant by remittances, and how they can benefit a developing country.
[2 marks] · no calculator - 11.
Explain one benefit to member countries of forming a trade bloc, such as a group of countries agreeing to trade freely with each other.
[2 marks] · no calculator - 12.
Explain the infant industry argument for temporarily protecting a new domestic industry with tariffs on imports.
[2 marks] · no calculator - 13.
Explain what is meant by dumping in international trade, and why other countries often object to it.
[2 marks] · no calculator - 14.
Distinguish between a fixed exchange rate system and a floating exchange rate system.
[2 marks] · no calculator - 15.
Explain the difference between a currency depreciation and a currency devaluation.
[2 marks] · no calculator - 16.
Explain one risk to a developing country of relying heavily on exporting a single primary commodity, such as one type of agricultural crop.
[2 marks] · no calculator - 17.
Explain what is meant by debt relief, and why some developing countries receive it.
[2 marks] · no calculator - 18.
Explain what is meant by ‘brain drain’, and why it can be a problem for a developing country.
[2 marks] · no calculator - 19.
Explain one challenge that rapid population growth can create for economic development in a low-income country.
[2 marks] · no calculator - 20.
Explain why investing in primary education is often considered one of the most effective ways for a developing country to promote long-term economic development.
[2 marks] · no calculator - 21.
Explain what is meant by sustainable development.
[2 marks] · no calculator - 22.
Discuss whether international aid or increased trade opportunities is likely to do more to help a low-income country develop in the long run.
[4 marks] · no calculator - 23.
Explain the purpose of a fair trade scheme for a product such as coffee grown by small farmers in a developing country.
[2 marks] · no calculator - 24.
Explain what is meant by a country's terms of trade.
[2 marks] · no calculator