14.0 International trade (APT)

Which one of the following is a cause of globalisation

• Firms experiencing diseconomies of scale

• An increase in tariffs

• A decrease in the number of global trade blocks

• containerisation

Which one of the following is a characteristic of globalisation

• Low levels of labour migration

• The development of global brands

• A decrease in foreign direct investment

• A reduction in out-sourcing and off-shoring of production

Which one of the following is a negative consequence of globalisation for less-developed countries

• Enhanced cultural uniqueness

• Skills transferred to domestic workers

• Improved terms of trade

• Wider income inequalities

One role of multinational corporations in globalisation is to

• Produce and sell in many countries

• Restrict the transfer of workers skills between nations

• Increase the costs of global branding

• Obstruct the international division of labour and corresponding efficiency gains

The table shows the maximum possible output of two countries producing only two goods - mobile phones and laptops. Which one of the following statements is true

• Country A has an absolute advantage in producing both mobile phones and laptops

• Country A has a comparative advantage in producing laptops because it only has to give up 1 mobile phone in order to produce an additional laptop, whereas Country B has to give up 7 mobile phones to produce an additional laptop

• Country A has a comparative advantage in producing laptops because it is 6 times as efficient as Country B at producing laptops and is only 1.67 times as efficient than country B at producing mobile phones

• Country B has a comparative advantage in producing mobile phones because it is 0.86 times as efficient as Country A at producing mobile phones but only 1.67 times as efficient as Country A at producing laptops

Which one of the following options correctly identifies the distinction between comparative and absolute advantage

• A

• B

• C

• D

Two countries A and B both produce mobile phones and laptops. Their relative production levels with half of their resources devoted to the production of each good are shown in the table below. If each country were to specialise in the production of the good in which it has a comparative advantage (assuming constant returns to scale) and then engage in trade in order to receive the other good, the increase in total output would be

• 130 mobile phones and 60 laptops

• 10 mobile phones and 50 laptops

• 50 mobile phones and 10 laptops

• 140 mobile phones and 120 laptops

One of the benefits of international trade is the possibility of increased output which means

• an opportunity to avoid diseconomies of scale

• an opportunity to exploit economies of scale

• an increase in the extent of competition for domestic firms

• reduced immigration

Which of the following is a cost of international trade

• More domestic production for the domestic market

• More variety of goods for domestic consumers

• Fewer domestic jobs available

• Less competition for domestic firms

Which one of the following explains changes in the pattern of trade between the UK and the rest of the world

• UK trade with oil exporting countries has increased. This is because the exploitation of North Sea Oil has increased UK dependence on oil imports

• The majority of UK trade in goods is now with countries outside of the European Union.

• A change in comparative advantage between the UK and newly industrialised nations has mean that the UK is now a net exporter of manufactured goods

• A change in comparative advantage between the UK and newly industrialised nations has mean that the UK is now a net importer of manufactured goods