Edexcel A Level Economics B Theme 3: The Global Economy Exam Questions

About Edexcel A Level Economics B Theme 3: The Global Economy

Theme 3 of Edexcel A Level Economics B studies the forces that have connected economies around the world. You look at the causes of globalisation, the growth of trade and multinational corporations, and the economic growth of emerging economies. The theme then asks who wins and who loses: the impact of globalisation on local and national economies, and the causes and consequences of inequality, plus the ways governments redistribute income. It is assessed in Paper 2, Competing in the global economy, together with Theme 2, and in Paper 3. Examiners expect you to use real examples and to weigh the benefits and costs of globalisation for different groups.

What you need to know

• 3.1 Globalisation The causes of globalisation, including improvements in transport and communication, trade liberalisation and the growth of multinational corporations. Know the role of emerging economies and international trade flows.
• Trade and specialisation Absolute and comparative advantage, the gains from specialisation and trade, and the role of trading blocs and the WTO. Protectionist measures such as tariffs and quotas and their effects on consumers and producers.
• 3.4 Impact of Globalisation on Local and National Economies Effects on employment, wages, prices, choice and the environment; the closure or relocation of industries; the positive and negative impacts of multinationals on host countries; and the response of local communities and governments.
• 3.6 Inequality and Redistribution Absolute and relative poverty, income and wealth inequality, the Lorenz curve and Gini coefficient, causes of inequality, and redistribution through progressive taxes, benefits, the minimum wage and public services.
• Evaluation themes Globalisation creates winners (consumers, exporters, skilled workers) and losers (workers in declining industries, some regions). Effects vary by country and over time.

Common mistakes in Theme 3: The Global Economy

• Treating globalisation as only about trade. It also includes flows of capital, labour, technology and ideas.
• Saying a higher Gini coefficient means more equality. A Gini of 0 is perfect equality and 1 (or 100) is perfect inequality, so a higher value means more inequality.
• Assuming multinationals always exploit host countries. They can bring jobs, skills, technology and tax revenue, so evaluate both sides.
• Writing about inequality without separating income from wealth. Income is a flow over time; wealth is a stock of assets, and wealth is usually more unequally distributed.
• Forgetting the losers from trade. Comparative advantage raises total output, but some workers and regions lose out and may need support.

Try three Theme 3: The Global Economy exam-style questions