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A Level H2 Economics International Economics Quiz
Free A Level H2 Econs International Economics quiz, HY3 Exam version, with questions, answers, and A Level-style practice for Singapore students.
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Questions
A-Level Economics H2 Quiz - International Economics
Name: ___________________________
Class: ___________________________
Date: ___________________________
Score: _______ / 40
Duration: 60 minutes
Total Marks: 40
Topic: International Economics (Theme 3.3 – Globalisation and International Economy)
Instructions:
- Answer all 20 questions.
- Section A: Multiple-choice style short questions (1 mark each).
- Section B: Data-response and diagram questions (2–3 marks each).
- Section C: Structured and evaluative questions (4–6 marks each).
- Use diagrams where requested and label them clearly.
- Write your answers in the spaces provided.
Section A: Fundamentals (Questions 1–5, 1 mark each)
1. The principle that a country should specialise in producing goods for which it has the lowest opportunity cost is known as:
A. Absolute advantage
B. Comparative advantage
C. Economies of scale
D. Terms of trade
2. A tariff is best described as:
A. A limit on the quantity of imports
B. A tax on imported goods
C. A subsidy to exporters
D. A voluntary export restraint
3. The current account of the balance of payments records:
A. Foreign direct investment flows
B. Trade in goods and services plus income flows
C. Central bank reserve changes
D. Portfolio equity purchases
4. If the Singapore dollar appreciates against the US dollar, Singapore’s exports to the US become:
A. Cheaper in US dollar terms
B. More expensive in US dollar terms
C. Unchanged in price
D. Subject to quota
5. A trading bloc such as ASEAN promotes:
A. Higher external tariffs for all members
B. Free movement of goods among members
C. Export subsidies to non-members
D. Fixed exchange rates
Section B: Data and Diagrams (Questions 6–10, 2–3 marks each)
6. With reference to Extract 1 below, use a demand–supply diagram to explain how a rise in global electric vehicle demand affects the world market for lithium.
Extract 1: Global EV sales rose 35% in 2024, raising demand for battery minerals such as lithium.
7. Using the data in Table 1, calculate the terms of trade index for Country X in 2024 (base year 2020 = 100), given export price index = 130 and import price index = 110. Show your working.
Table 1: Country X Price Indices
| Year | Export Price Index | Import Price Index |
|---|---|---|
| 2020 | 100 | 100 |
| 2024 | 130 | 110 |
8.
Image pending generation: graph for Q8.
With reference to the diagram, explain the effect of the tariff on the quantity of imports. (2 marks)
9. Explain one reason why a country may impose an import quota rather than a tariff. (2 marks)
10. With reference to Extract 2, compare the trend in merchandise trade openness (exports + imports as % of GDP) for Nation A and Nation B from 2019 to 2023.
Extract 2: Nation A openness rose from 120% to 145%; Nation B fell from 90% to 78%.
Section C: Structured and Evaluation (Questions 11–20, 4–6 marks each)
11. Explain how specialisation according to comparative advantage increases global output. Use a simple two-country, two-good example in your answer. (4 marks)
12. With the aid of a diagram, explain the impact of a subsidy on domestic exporters of steel on the domestic market and government expenditure. (4 marks)
13. Discuss whether protectionism can ever be justified on grounds of infant industry development. (5 marks)
14. Using a diagram, explain how a rise in a country’s exchange rate affects its current account balance, assuming relatively elastic import demand. (4 marks)
15.
Image pending generation: chart for Q15.
With reference to the chart, explain two factors that could account for the differing trends in FDI inflows. (4 marks)
16. Evaluate the view that globalisation always leads to a net gain in welfare for developing countries. (6 marks)
17. A small economy imposes a tariff on imported wheat. With the aid of a diagram, show the change in consumer surplus, producer surplus, and deadweight loss. (5 marks)
18. Using Extract 3, explain how non-tariff barriers such as technical standards can reduce trade between members of a trade agreement.
Extract 3: In 2023, Country C rejected 12% of imports from Partner D due to new labelling rules not applied to domestic firms.
19. Discuss whether a current account deficit is necessarily a sign of economic weakness. (5 marks)
20. “Regional trade agreements make the world less efficient by diverting trade from low-cost external producers.” Evaluate this statement with reference to trade creation and trade diversion. (6 marks)
Answers
A-Level Economics H2 Quiz - International Economics (Answer Key)
Total Marks: 40
Topic: International Economics
Section A: Fundamentals (Q1–5, 1 mark each)
Q1. B – Comparative advantage
Teaching note: Comparative advantage (Ricardo) says specialise where opportunity cost is lowest, not where absolute output is highest. Absolute advantage (A) is about productivity, not opportunity cost.
Q2. B – A tax on imported goods
Teaching note: Tariff = customs duty on imports. Quota (A) is quantity limit; subsidy (C) is payment; VER (D) is voluntary restraint.
Q3. B – Trade in goods and services plus income flows
Teaching note: Current account = goods, services, primary income, secondary income. Financial account (A, C, D) records capital flows.
Q4. B – More expensive in US dollar terms
Teaching note: SGD appreciation means 1 SGD buys more USD; US buyers need more USD for same SGD price → S’pore exports pricier for them.
Q5. B – Free movement of goods among members
Teaching note: Trading blocs (e.g. ASEAN) reduce internal barriers; external tariffs may vary (not necessarily higher for all, A).
Section B: Data and Diagrams (Q6–10)
Q6. (3 marks)
- Draw final EV market: D_EV shifts right → higher P and Q of EVs. (1)
- Lithium is derived demand: higher EV output raises demand for lithium → D_li shifts right. (1)
- World lithium market: P_lithium and Q_lithium rise. Label axes (P, Q), curves, new equilibrium. (1)
Teaching note: Must show input market, not just EV market.
Q7. (2 marks)
Terms of Trade (ToT) = (Export Price Index / Import Price Index) × 100
= (130 / 110) × 100 = 118.2 (or 118)
Working: 130 ÷ 110 = 1.1818 → ×100 = 118.2.
Teaching note: ToT > 100 means improving terms; country buys more imports per unit export.
Q8. (2 marks)
- Without tariff, imports = D_d – S_d at P_w = (say 100 – 20) = 80 units (from context).
- With tariff P_t = $360, domestic supply = 40, demand = 80, imports = 40 units. (1)
- Tariff reduces imports from 80 to 40 units (by 40 units). (1)
Teaching note: Use diagram values: P_w=300,Pt=360, Q_s=40, Q_d=80 → imports 40.
Q9. (2 marks)
One reason: Quota gives certainty on quantity (e.g. protect domestic jobs to a fixed limit) whereas tariff may still allow volume to rise if demand grows. (2) Or: quota avoids tariff revenue going to government, instead rents may go to licence holders.
Teaching note: Need a distinct reason from tariff; not “because it’s a limit”.
Q10. (2 marks)
- Nation A openness increased from 120% to 145% (rising integration). (1)
- Nation B decreased from 90% to 78% (declining trade reliance). (1)
Teaching note: Compare both directions, not just one.
Section C: Structured and Evaluation (Q11–20)
Q11. (4 marks)
Define comparative advantage: lower opp cost. (1)
Example: S’pore & Malaysia; S’pore better at electronics, Malaysia at palm oil; opp cost of electronics lower in S’pore. (1)
Specialisation → each produces more of comparative-advantage good. (1)
Trade → combined output exceeds self-sufficiency (gain from trade). (1)
Teaching note: Must show opportunity cost logic, not just “they are good at it”.
Q12. (4 marks)
Diagram: D_d, S_d, world price P_w; subsidy shifts S_d down to S_d+sub → higher domestic Q, lower price to consumers. (2)
Govt expenditure = subsidy per unit × new Q_s. (1)
Expands domestic output, may reduce imports. (1)
Teaching note: Label subsidy wedge, new equilibrium.
Q13. (5 marks)
For: infant industries need protection to achieve scale/efficiency (2); externalities of learning. (1)
Against: risk of permanence, rent-seeking, consumer cost. (1)
Judgement: justified temporarily with exit plan. (1)
Marking: 2+2+1 structure.
Q14. (4 marks)
Appreciation → exports dearer, imports cheaper. (1)
Diagram: exchange rate ↑, net exports (NX) fall on AD/CA schedule. (1)
Elastic import demand → volume of imports rises substantially, expenditure rises. (1)
Current account worsens (deficit widens). (1)
Q15. (4 marks)
From chart: Vietnam & Malaysia rose, Thailand flat. (1)
Factor 1: Vietnam lower labour costs / supply chain shift from China. (1)
Factor 2: Malaysia existing semiconductor base; Thailand political/slowdown. (1)
Conclude differing locational advantages. (1)
Q16. (6 marks)
Yes gains: tech transfer, cheaper goods, scale. (2)
No / risks: inequality, fragile external dependence, cultural loss. (2)
Eval: net depends on policies, absorptive capacity. (2)
Descriptors: 2 for points each side, 2 for balanced judgement.
Q17. (5 marks)
Diagram: D, S, S_w; tariff raises price P_w→P_t. (1)
CS falls by a+b+c+d. (1)
PS rises by a. (1)
Govt revenue c; DWL = b+d. (2)
Teaching note: label areas.
Q18. (3 marks)
Technical standards as NTB raise compliance cost for Partner D. (1)
Extract: 12% rejected → effective barrier. (1)
Reduces trade despite agreement; like invisible tariff. (1)
Q19. (5 marks)
Not necessarily: deficit may fund investment (2); mirror of capital inflow (1).
But if unsustainable → currency pressure (1).
Judgement: context-dependent (1).
Q20. (6 marks)
Trade creation: bloc members buy cheaper internally → efficiency. (2)
Trade diversion: shift from efficient external to less efficient member → loss. (2)
Eval: net depends on pre-bloc tariffs & complementarity. (2)
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