4.1 International economics

Question 1

a) Characteristics of globalisation

Question 2

b) Factors contributing to globalisation in the last 50 years

Question 3

c) Impacts of globalisation and global companies on
individual countries, governments, producers and
consumers, workers and the environment

Question 4

a) Absolute and comparative advantage (numerical and
diagrammatic): assumptions and limitations relating to
the theory of comparative advantage

Question 5

b) Advantages and disadvantages of specialisation and
trade in an international context

Question 6

a) Factors influencing the pattern of trade between
countries and changes in trade flows between countries:

Answer 6

o comparative advantage
o impact of emerging economies
o growth of trading blocs and bilateral trading
agreements
o changes in relative exchange rates

Question 7

a) Calculation of terms of trade

Question 8

b) Factors influencing a country’s terms of trade

Question 9

c) Impact of changes in a country’s terms of trade

Question 10

a) Types of trading blocs (regional trade agreements and
bilateral trade agreements):
o free trade areas
o customs unions
o common markets
o monetary unions: conditions necessary for their
success with particular reference to the Eurozone

Question 11

b) Costs and benefits of regional trade agreements

Question 12

c) Role of the WTO in trade liberalisation

Question 13

d) Possible conflicts between regional trade agreements
and the WTO

Question 14

a) Reasons for restrictions on free trade

Question 15

b) Types of restrictions on trade:

Answer 15

Types of restrictions on trade:
o tariffs
o quotas
o subsidies to domestic producers
o non-tariff barriers

Question 16

c) Impact of protectionist policies on consumers,
producers, governments, living standards, equality

Question 17

a) Components of the balance of payments:
o the current account
o the capital and financial accounts

Question 18

b) Causes of deficits and surpluses on the current account

Question 19

c) Measures to reduce a country’s imbalance on the current
account

Question 20

d) Significance of global trade imbalances

Question 21

a) Exchange rate systems:
o floating
o fixed
o managed

Question 22

b) Distinction between revaluation and appreciation of a
currency

Question 23

c) Distinction between devaluation and depreciation of a
currency

Question 24

d) Factors influencing floating exchange rates

Question 25

e) Government intervention in currency markets through
foreign currency transactions and the use of interest
rates

Question 26

f) Competitive devaluation/depreciation and its
consequences

Question 27

g) Impact of changes in exchange rates:
o the current account of the balance of payments
(reference to Marshall-Lerner condition and J curve
effect)
o economic growth and employment/unemployment
o rate of inflation
o foreign direct investment (FDI) flows

Question 28

a) Measures of international competitiveness:
o relative unit labour costs
o relative export prices

Question 29

b) Factors influencing international competitiveness

Question 30

c) Significance of international competitiveness:
o benefits of being internationally competitive
o problems of being internationally uncompetitive