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SingaporeEconomics

International Trade and Globalisation

5 dot points across 5 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

Why can two countries both gain from trade even if one is better at making everything?

Explain comparative advantage and use it to show how specialisation and trade raise total output
A focused answer to the H2 Economics learning outcome on comparative advantage. The difference from absolute advantage, how opportunity cost determines who should specialise, and how trade within the terms-of-trade range raises total output.
10 min answer →

How is a currency's value determined, and how does a change in it affect trade and the economy?

Explain how exchange rates are determined and analyse how a change in the exchange rate affects the balance of payments and the economy
A focused answer to the H2 Economics learning outcome on exchange rates. How the demand for and supply of a currency set its value, the effects of appreciation and depreciation on the balance of payments, inflation and growth, and the Marshall-Lerner condition.
10 min answer →

What are the benefits of free trade, and how do trade agreements create and divert trade?

Evaluate the case for free trade, and explain trade creation and trade diversion under trade agreements
A focused answer to the H2 Economics learning outcome on free trade. The benefits of free trade from specialisation, competition and scale, the meaning of trade creation and trade diversion in trade blocs, and the case against unrestricted trade.
9 min answer →

What is driving the integration of the world economy, and who benefits and who loses?

Explain the causes of globalisation and evaluate its economic effects on growth, inequality and development
A focused answer to the H2 Economics learning outcome on globalisation. The drivers of growing world integration, the benefits for growth and consumers, the costs including inequality and vulnerability, and a balanced evaluation.
9 min answer →

Why do governments restrict trade, and who wins and loses from a tariff?

Analyse the methods and effects of protectionism using a tariff diagram, and evaluate the arguments for and against it
A focused answer to the H2 Economics learning outcome on protectionism. The methods (tariffs, quotas, subsidies), the welfare effects of a tariff shown on a diagram, and a balanced evaluation of the arguments for and against protection.
10 min answer →