Economics 0455 · IGCSE · Globalisation, free trade and protection
Globalisation, free trade and protection — practice question
The Indian government provides a subsidy for the country’s cotton textile exports. The USA, the biggest buyer of Indian cotton textiles, gained from this. India intended to end the subsidy by 2019. Other cotton textile exporters welcomed this decision. The USA may not be affected much, partly because income in the country usually rises. The value of the Indian rupee against the US dollar was fairly steady over this period, although it rose slightly in mid-2017.
(a)[2]
Identify how an export differs from an import.
(b)[4]
Explain how an increase in the income of a country’s main trading partners may influence its trade in goods balance.
(c)[6]
Analyse how an increase in a country’s foreign exchange rate may affect its unemployment rate.
(d)[8]
Discuss whether a government should or should not subsidise its exports.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Exports are goods sold to foreign countries” …