International Economics | Edexcel A-Level Economics A (9EC0)

International Economics

254 questions
18 subtopics
Theme 4: a global perspective
Paper 2 and Paper 3

Covers the economics of an open world: globalisation and who gains from it, comparative advantage, trading blocs and the WTO, protectionism, the balance of payments, exchange rates, and what makes a country competitive..

It covers what globalisation is and what has driven it, the winners and losers from globalisation, absolute and comparative advantage, the assumptions and limitations of comparative advantage, the gains and costs of international specialisation, pattern of trade, terms of trade, types of trading bloc and the hierarchy of integration, trade creation, trade diversion and the costs of trading blocs, the World Trade Organisation, why governments restrict trade, and the instruments used, the effects of protectionism, balance of payments in a global context, exchange rate systems, and appreciation against revaluation, what moves a floating rate, and how governments intervene, the Marshall-Lerner condition and the J-curve effect, measuring competitiveness: unit labour costs and export prices and what determines competitiveness, and the cost of losing it.

Sample questions from International Economics

Answer each one closed book first, then open the answer.

What globalisation is and what has driven it

What type of corporations are associated with globalisation due to their operations spanning multiple countries?

Show the answer
Multinational and transnational corporations, which operate across multiple countries.
Absolute and comparative advantage

In a two-good model, how is opportunity cost defined?

Show the answer
Opportunity cost equals the amount of the other good that must be forgone to produce one additional unit of the chosen good.
The gains and costs of international specialisation

What knowledge-related benefit can arise from international specialisation?

Show the answer
Transfer of technology and knowledge between trading nations occurs, benefiting productivity and development.
Terms of trade

Explain how relative inflation rates between countries can influence the terms of trade.

Show the answer
Higher domestic inflation than in trading partners tends to raise export prices faster than import prices, improving the terms of trade even though exports become less price-competitive.
Trade creation, trade diversion and the costs of trading blocs

Why does the Eurozone lack sufficient labour mobility?

Show the answer
Language barriers and cultural differences between member states restrict the movement of workers.
Why governments restrict trade, and the instruments used

Why might a government impose trade restrictions to raise revenue?

Show the answer
Tariffs collected on imported goods provide a source of government revenue.
Balance of payments in a global context

Why should the overall balance of payments sum to zero?

Show the answer
It is based on double-entry bookkeeping, so every current account transaction has a matching entry elsewhere. A current account deficit must be financed by a net inflow on the financial (and capital) account, so the accounts balance overall, aside from errors and omissions.
What moves a floating rate, and how governments intervene

Why might strong relative economic growth cause a currency to appreciate?

Show the answer
Strong growth attracts investment and increases demand for the currency.

The 18 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
What globalisation is and what has driven it	Recall questions on the characteristics of globalisation and on containerisation, communications, trade liberalisation, financial deregulation and the growth of trading blocs.	12
The winners and losers from globalisation	Recall questions on the effects on countries, producers, consumers, workers, the environment and inequality.	14
Absolute and comparative advantage	Recall questions on what each means, calculating opportunity cost in a two-good model, and reading comparative advantage off a PPF.	10
The assumptions and limitations of comparative advantage	Recall questions on the assumptions the theory makes and on transport costs, trade barriers, exchange rates and factor immobility as limitations.	12
The gains and costs of international specialisation	Recall questions on higher output, economies of scale, choice and innovation, set against structural unemployment, over-dependence and environmental harm.	16
Pattern of trade	Recall questions on comparative advantage, emerging economies, trading blocs and exchange rates as influences on who trades what with whom.	17
Terms of trade	Recall questions on how the terms of trade are calculated, what moves them, and what a change means for a country.	20
Types of trading bloc and the hierarchy of integration	Recall questions on regional and bilateral trade agreements, free trade areas, customs unions, common markets and monetary unions, what each stage adds, and why a country might be reluctant to join a monetary union.	13
Trade creation, trade diversion and the costs of trading blocs	Recall questions on the conditions for a successful monetary union and the Eurozone’s difficulties, trade creation, the benefits of regional trade agreements, trade diversion, and the costs to sovereignty, employment and the distribution of gains.	18
The World Trade Organisation	Recall questions on what the WTO does, the most favoured nation principle, dispute resolution, and its uneasy relationship with regional agreements.	10
Why governments restrict trade, and the instruments used	Recall questions on infant industries, dumping, national security and the current account as justifications, and on tariffs, quotas, subsidies and non-tariff barriers.	15
The effects of protectionism	Recall questions on the impact on consumers, producers, governments and living standards, and on retaliation and deadweight loss.	12
Balance of payments in a global context	Recall questions on the current, capital and financial accounts, why the balance of payments sums to zero, the causes and consequences of deficits and surpluses, expenditure-switching, expenditure-reducing and supply-side policies, and global imbalances.	17
Exchange rate systems, and appreciation against revaluation	Recall questions on floating, fixed and managed systems, and on what separates appreciation from revaluation and depreciation from devaluation.	9
What moves a floating rate, and how governments intervene	Recall questions on interest rates, inflation, the current account, speculation, investment flows, growth and political instability as influences on a floating rate, intervention through reserves and interest rates, and the consequences of competitive devaluation.	15
The Marshall-Lerner condition and the J-curve effect	Recall questions on when a depreciation improves the current account, why it worsens first, and the effects on growth, inflation and investment.	17
Measuring competitiveness: unit labour costs and export prices	Recall questions on calculating unit labour costs, relative export prices, and what a rise in either means.	11
What determines competitiveness, and the cost of losing it	Recall questions on productivity, wages, investment, research, regulation and infrastructure, and on the consequences of becoming uncompetitive.	16

International Economics is 254 of the 2,508 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.