Globalisation, free trade and protection

During 2013, a German medicines manufacturer acquired a UK business that operated a chain of pharmacies selling medicines. Which term best describes this takeover?

May/June 2015

Russia is a wheat exporter. In 2010, a poor harvest led the Russian government to ban wheat exports in order to keep sufficient supplies for domestic use. What was the most likely result of the government’s decision?

May/June 2015

Skin creams that help prevent sunburn and are produced in the European Union (EU) are more effective than those manufactured in the United States (US). US tourists buy large supplies of these creams when they travel to Europe. The production of such creams is banned in the US because of the chemicals they contain. In 2013, talks started to end this ban so that production could take place in the US. How is this free trade likely to affect skin cream manufacturers in the US and the EU?

May/June 2015

Which of the following is not a cause of the fall in manufacturing industries in developed economies in recent years?

May/June 2015

Russia exports wheat. In 2010, a poor harvest led the Russian government to stop wheat being exported, so that adequate supplies would stay available for domestic use. What was the most likely result of the government’s action?

May/June 2015

A country states that it wants to strengthen its trade protection policies. What could that include?

May/June 2016

It has been proposed that every country that manufactures arms should prohibit weapons exports and reduce output so as to lessen the chance of war. What would happen if this took place?

May/June 2016

A country states that it wants to strengthen its trade protection policies. What could that involve?

May/June 2016

It has been proposed that every country making arms should prohibit the export of weapons and reduce production so as to lower the likelihood of war. What would happen if this were to take place?

May/June 2016

What must necessarily be included in international free trade?

May/June 2017

Which government policy is most likely to raise the volume of exports?

May/June 2017

In 2015, Russia prohibited imports of food items, including milk, from the European Union (EU). Which results are most likely to occur because of this?

May/June 2017

A country has decided to expand free trade with the nations it trades with. Which measure would assist it in achieving this objective?

May/June 2018

A country wants to adopt a policy of trade protection. Which measure would it use?

May/June 2018

The Tripartite Free Trade Area (TFTA) was created in 2015. It brings together 26 countries and is the largest free trade area in Africa. When trade barriers are removed, economies can benefit more from economies of scale. Some economists, however, believe that upgrading Africa’s roads would yield greater gains and would reduce a current account deficit on the balance of payments more effectively, while also improving living standards.

May/June 2018

World output has risen in recent years, yet several countries have gone through recession. The easing of trade barriers, including import tariffs, has slowed, which has reduced the pace at which world trade is growing.

May/June 2018

The US government decides to lower the quota on a good that it purchases from China. What is likely to happen?

May/June 2019

In 2013, the European Union (EU) imposed a 48% tariff on inexpensive Chinese solar panels because their low price was due to subsidies from the Chinese government. Which argument for protectionism was the EU applying?

May/June 2019

The US government chooses to cut the quota size for a good that it imports from China. What outcome is most likely?

May/June 2019

A worldwide surplus of steel existed in 2017. During mid-2017, the US government was considering the use of tariffs on steel imports to shield its declining steel industry. Inexpensive imports from other countries were cutting jobs in the US steel industry. Changes in the US employment pattern were also being influenced by improvements in education.

May/June 2019

Which form of protection always cuts the supply of an imported good to zero?

May/June 2021

A multinational company (MNC) wants to invest in a low-income country in order to increase its palm oil production. What is the factor most likely to make this investment feasible?

May/June 2021

Which benefit is most likely for a low-income economy if it abolishes tariffs on imported goods and services?

May/June 2021

Economies have become more and more interconnected as a result of globalisation. What could reduce this?

May/June 2021

A government abolished the quota on goods brought into the country. What is the most likely outcome of this?

May/June 2022

The US government places tariffs on steel brought in from China. This raises the price of imported Chinese steel. Whose income would be expected to rise as a direct result?

May/June 2022

A government abolished the quota on goods brought into the country. What is the most likely outcome of this?

May/June 2022

The South Korean government believes that Japan is dumping steel. South Korean firms both trade in, and manufacture within, other countries. Some South Korean multinational companies (MNCs) argue that they help to reduce poverty in the countries where they operate. In 2019, South Korean firms were hit by a depreciation of South Korea’s foreign exchange rate. A number of firms also faced labour shortages, influenced by the country’s extremely low birth rate.

May/June 2022

For developed economies, it costs less to import some cereals from developing economies than to grow them within the country. What could cause international trade in cereals to fall?

May/June 2023

A country places a quota on cars brought in from abroad. What is the most likely result of this measure?

May/June 2023

Which of the following is not a cause of the recent fall in manufacturing industries in developed economies?

May/June 2023

Country X sells steel to country Y at a price that is lower than the cost of producing it. As a result, demand for steel made in country Y has decreased. What is a trade protection method that country Y could use to cut the imports of steel from country X?

May/June 2023

What is one intended result of shielding infant industries from free trade?

May/June 2024

The diagram illustrates the market for an imported good, with equilibrium at point X. A tariff is then imposed by the country on this good. Does the new equilibrium occur at point A, B, C or D?

May/June 2024

What meaning might an economist attach to the term dumping?

May/June 2025

Mining undertaken by multinational companies (MNCs) creates both costs and gains for the host nation. Which activity is least likely to bring an advantage to the host nation?

May/June 2025

Australia contains several firms that carry on business in other countries. These multinational companies (MNCs) bring a range of advantages to their home country, Australia. The Australian Government sets relatively low import tariffs, and the country uses a floating exchange rate. Over recent years, Australia has seen more investment and a higher Human Development Index (HDI) figure.

May/June 2025

A nation places tariffs and quotas on goods brought in from abroad. What effect will this have on the country’s citizens?

Oct/Nov 2015

Forecasts suggest that Mexico will rank among the world’s ten largest economies by 2020. The country’s industrial structure has been changing for a long time. In 2008, 12% of the labour force were employed in the primary sector (mainly agriculture), 26% in the secondary sector (mainly manufacturing) and 62% in the tertiary sector (services). By 2012, employment had dropped by 1% in the primary sector and by 2% in the secondary sector. Over recent years, Mexico has been dismantling trade protection policies such as tariffs and quotas. It now has free trade with more than 40 other countries. International trade is central to the Mexican economy, with one third of output exported and imports making up more than a third of the goods bought in Mexico. Nearly 80% of Mexico’s exports are sent to the United States of America (US). Mexican firms can choose from many sources of imported raw materials and also have a large international market in which to sell their products. The main destination for Mexico’s shrinking number of emigrants is the US. Following an economic downturn in 2009, the Mexican economy has expanded. Incomes have increased and life expectancy has risen. Table 1 shows income levels and life expectancy for several countries. Although the standard of Mexico’s education is not very high, poverty is falling in the country as living standards rise. More people now have access to better quality health care. Unlike its neighbour the US, unemployment has been falling in Mexico. Production costs in Mexico are rising more slowly than in China. Mexico imports goods from China and also competes with China in several export markets. Some of Mexico’s leading exporting firms are monopolies inside the country. One example is Pemex, the state-owned oil and gas monopoly. The firm sells oil worldwide. Some economists argue that Mexican consumers would gain if Pemex were sold to the private sector.

Oct/Nov 2015

A Japanese car manufacturer chose to make its cars in a factory located in Europe. What would not be a reason for making this choice?

Oct/Nov 2016

A government abolished the quota on goods brought into the country. What is the most likely effect of this?

Oct/Nov 2016

A Japanese car manufacturer chose to make its cars in a factory in Europe. Which of the following would not explain why it may have made this choice?

Oct/Nov 2016

A government abolished the quota on goods brought into the country. What is the most likely outcome of this?

Oct/Nov 2016

During recent years, productivity growth in Brazil has been weak, so average costs have remained relatively high. Some economists argue that this sluggish rise in productivity is caused by protectionism. The Brazilian Government applies high tariffs to a range of imports, including smartphones, and says that this protectionism protects Brazilian jobs.

Oct/Nov 2016

Mozambique is a developing economy with a fairly high rate of economic growth. Over recent years, the metical has depreciated against the US dollar. This has influenced the country’s unemployment rate. Some economists in Mozambique have argued for higher tariffs on imports as a way of lowering unemployment.

Oct/Nov 2016

What is one advantage of tariffs?

Oct/Nov 2017

State one advantage of tariffs.

Oct/Nov 2017

In Pakistan, the range of cars available to purchase is small. The country has a population of around 190 million, yet it produces only about 120 000 cars each year. Car producers in Pakistan are shielded from overseas competition by several trade-protection measures.

Oct/Nov 2017

Trade protection narrows the scope for countries to specialise and affects the current account balances that countries record in their balance of payments. Developed countries and developing countries also differ in how much trade protection they apply and in the forms it takes. Developed countries usually have a lower death rate than developing countries too.

Oct/Nov 2017

What is the most probable outcome if South Korea establishes a factory in Switzerland and it makes a profit?

Oct/Nov 2018

The table sets out the tariffs applied by the European Union (EU) to imported tropical fruit, depending on how much processing they have undergone. What could explain this tariff pattern?

Oct/Nov 2018

A government places a limit of 2 million on the number of smartphones that may be imported into the country. What term is used for this restriction?

Oct/Nov 2018

What is most likely to happen if South Korea sets up a factory in Switzerland that starts making a profit?

Oct/Nov 2018

The table sets out the tariffs levied by the European Union (EU) on imported tropical fruit, depending on the extent of processing. What could explain this tariff pattern?

Oct/Nov 2018

What is one disadvantage of protecting manufactured goods through trade protection?

Oct/Nov 2019

What could cause the volume of international trade in the world economy to fall?

Oct/Nov 2019

A newspaper headline read ‘Free trade helps the world’s poorest’. Why could this be true?

Oct/Nov 2019

What factor would decrease the amount of international trade in the global economy?

Oct/Nov 2019

The Indian government gives subsidies to the country’s cotton textile exports. The USA, the biggest purchaser of Indian cotton textiles, gained from this. India intended to end the subsidy by $2019$. Other cotton textile exporters welcomed this. The USA may be only slightly affected, partly because income in the country usually rises. The value of the Indian rupee against the US dollar was fairly steady during this period, though it increased a little in mid-$2017$.

Oct/Nov 2019

In 2016, France recorded a deficit in trade in services. France is a wealthy, developed nation with a high standard of living. However, the country is facing several difficulties, including population-related issues. In addition, after the 2017 elections, politicians and economists debated whether the country ought to attempt a move towards freer international trade.

Oct/Nov 2019

Mexico has a long record of trade deficits. The government is steering the economy nearer to free trade in an effort to improve macroeconomic performance. In 2017 it was forecast that Mexico’s economy would see a slight increase in unemployment. In 2017, inflation in the economy stood at 6.6%, the highest level since 2001. Several policy tools could be used to bring inflation down, including raising the rate of income tax.

Oct/Nov 2020

The US placed tariffs on cars and motorcycles imported from Germany. What effect do these tariffs have?

Oct/Nov 2021

State one reason for trade protection.

Oct/Nov 2021

In recent years, Norway has taken part in free trade to a larger degree. The country uses a floating foreign exchange rate. The pattern of employment in Norway has altered. For example, more Norwegians now work in jobs that require a university degree. Some of these graduates are economists and lawyers who deal with mergers between firms. In 2017, there were 332 mergers, which was 23% higher than in the previous year.

Oct/Nov 2021

What is a limit placed on the quantity of imports called?

Oct/Nov 2022

Which mix of factors would encourage a multinational company (MNC) that manufactures smartphones to set up operations in a low-income country?

Oct/Nov 2022

Country X manufactures cars and also brings in cars from overseas. Which group is least likely to gain from the introduction of an import tariff on cars?

Oct/Nov 2022

What could be a disadvantage for the country where it is based when a multinational company (MNC) grows into overseas markets?

Oct/Nov 2022

Although 15% of US exports go to Mexico, 80% of Mexico’s exports go to the US. In 2019, the US government introduced some protectionist measures to cut imports from Mexico. This US action led to a drop in Mexico’s foreign exchange rate. Even with a higher inflation rate, Mexico’s central bank cut the rate of interest from 7.75% at the end of 2019 to 6.5% in March 2020.

Oct/Nov 2022

Country X thinks that country Y is exporting steel at a price lower than the average cost of production. As a result, country X places a higher tariff on steel imports from country Y. What is country X hoping to achieve by introducing this higher tariff?

Oct/Nov 2023

A government wants to prevent the dumping of a particular imported good at a very low price. Which protection method would be the most effective?

Oct/Nov 2024

A country aims to cap the number of imported cars at a maximum of $100\,000$ per year. Which measure is most likely to meet this objective?

Oct/Nov 2024

A government places tariffs on imported goods. Which of these is not a likely reason for doing this?

Oct/Nov 2025

A country increases the tariffs it charges on imported goods. What is the outcome that is most likely?

Oct/Nov 2025

Which of the following is not likely to be a benefit of free trade?

Oct/Nov 2025

In some countries, dumping takes place when products are sold in Cambodia for below cost price. The Cambodian Government aims for the country to achieve high-income economy status by 2050. To raise its economic growth rate, it applies fiscal, monetary and supply-side policies. Cambodia gives subsidies to some infant industries. The nation has one of the world’s largest deficits on the current account of its balance of payments (as a percentage of GDP). Some economists argue that reducing taxes would help to cut this deficit.

Oct/Nov 2025