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A LevelEconomicsAQAExam QuestionsThe National & International Economy14. The International Economy

The International Economy (AQA A Level Economics): Exam Questions

Exam code: 7136

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14. The International Economy

1
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Figure 8 shows two supply (S1 and S2) curves and the demand (D) curve for euros on the foreign exchange market and the price of euros in terms of pounds sterling.

q29-paper-3-june-2020-aqa-a-level-economics

Which one of the following is the most likely explanation for the change in the exchange rate shown in Figure 8? An increase in eurozone

  • companies buying factories in the UK.

  • exports of manufactured goods to the UK.

  • interest rates relative to those in the UK.

  • productivity growth relative to that in the UK.

Choose your answer

2
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A large Asian steel-producing country dumps its surplus steel on the world market. All other things being equal, if the demand for steel is price elastic, the most likely consequence for the EU market for steel will be to

  • reduce excess capacity in the EU steel-making industry.

  • reduce the value of steel imports into the EU.

  • shift the demand curve for EU steel workers to the left.

  • shift the supply curve of EU steel workers to the left.

Choose your answer

3
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A country experiences a large net capital outflow. All other things being equal, the most box likely consequence of this in the short run will be a decrease in

  • its exchange rate.

  • its net income from overseas investments.

  • its rate of interest.

  • the value of exports and imports.

Choose your answer

4
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The diagram below shows the market demand curve (D), the market supply curve (S) for solar panels produced in a country, and the world market supply curve (SW) for solar panels.

q15-june-2018-aqa-a-level-economics

To protect domestic producers of solar panels the country introduces a tariff on imports. The imposition of the tariff increases the price of solar panels from the world market price (PW) to the higher price (PT). Following the imposition of the tariff, the amount of tariff revenue collected by the government is shown by the area

  • EFGH

  • JFGK

  • PWPTGK

  • Q2FGQ3

Choose your answer

5
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The table below shows the average exchange rate and currency valuation estimates for four nations in comparison to the US Dollar in January 2016.

 

Average exchange rate to US $1

Currency valuation estimate

Australian Dollar

1.46 

Undervalued by 24%

Brazilian Real

4.05

Undervalued by 32%

Chinese Yuan 

6.57

Undervalued by 46%

Danish Krone

 6.84

Undervalued by 12%

Which one of the following can be concluded from the data?

  • The Australian Dollar has appreciated by 24% against the US Dollar.

  • The Brazilian Real has been devalued by 32% against the US Dollar.

  • The Chinese Yuan has depreciated the most against the US Dollar.

  • The Danish Krone has the closest purchasing power parity to the US Dollar.

Choose your answer

6
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The table below shows selected components of the UK balance of payments on current account as a percentage of GDP between 2011 and 2014.

Year

Balance of trade in goods and services

Primary income balance

Secondary income balance

Current account balance

2011

-1.6

1.3

-1.3

-1.6

2012

-2.0

0.1

-1.3

-3.2

2013

-2.0

-1.0

-1.5

-4.5

2014

-1.9

-1.8

-1.4

-5.1

It can be concluded from the data that between 2011 and 2014 the main reason for the rise in the current account deficit as a percentage of GDP was

  • GDP growing faster than the deficit on the current account.

  • the deficit on trade in goods increasing by more than the surplus on trade in services.

  • the deterioration in the primary income balance.

  • the growth in the deficit on the secondary income balance.

Choose your answer

7
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Globalisation can make some product markets more contestable. Which one of the following characteristics of globalisation is the most likely explanation for such an increase in contestability?

  • A reduction in protectionism

  • Greater synchronisation of economic cycles between countries

  • Higher levels of labour migration

  • The growth of employment in emerging market economies

Choose your answer

8
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The table below shows how much of each of two products can be produced by two countries with the same amount of resources.

 

Motorbikes

 

Cars

Brazil

10

or

5

United States

6

or

2

Which one of the following statements is correct?

  • Brazil has a comparative advantage in the production of both motorbikes and cars.

  • Brazil has a comparative advantage in the production of cars.

  • The opportunity cost of producing motorbikes is higher in the United States than Brazil.

  • Trade will not take place because Brazil is better at producing both goods.

Choose your answer