Economics 0455 · IGCSE · Globalisation, free trade and protection
Globalisation, free trade and protection — practice question
Some countries practise dumping by exporting their products to Cambodia at below cost price. The Cambodian Government is aiming for the country to reach high-income economy status by 2050. It applies fiscal, monetary and supply-side policies to raise its economic growth rate. Cambodia provides subsidies for some infant industries. The country has one of the world’s largest deficits on the current account of its balance of payments, measured as a percentage of GDP. Some economists suggest that tax cuts would reduce this deficit.
(a)[2]
Identify two reasons why a firm dumps some of its products in an overseas market.
(b)[4]
Explain two differences between monetary policy and supply-side policy.
(c)[6]
Analyse how a government subsidy could help to protect an infant industry against foreign competition.
(d)[8]
Discuss whether tax cuts will or will not reduce a deficit on the current account of a country’s balance of payments.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Force domestic firms out of the market / raise market share / gain monopoly power in (overseas) market” …