Economics 2281 · O Level · Globalisation, free trade and protection
Globalisation, free trade and protection — practice question
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.
(a)[2]
Identify two motives for a firm dumping some of its products in a foreign 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 or not cuts in taxes will reduce a deficit on the current account of a country’s balance of payments.
Worked solution & mark scheme
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