OCR A Level Economics
OCR A Level Economics The Global Context Exam Questions
Free OCR A Level Economics exam questions for The Global Context, with a mark scheme for every pack. Covers globalisation, international trade, comparative advantage, terms of trade, trade policy, exchange rates, the balance of payments and development.
The Global Context exam questions
1 question pack of real past exam questions, each with its mark scheme. Do not stop after a few: answer as many as you can without notes, then mark every answer with the mark scheme. The more questions you do, the more quickly you will spot how examiners ask about each idea.
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A-Level Economics Flashcards for 2027 Onwards
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Then test yourself with the questions on this page.
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About OCR A Level Economics The Global Context
The Global Context is a Macroeconomics topic in OCR A Level Economics that places the UK economy in its international setting. You study globalisation and its effects, the theory of comparative advantage, the terms of trade, trade policy including protectionism and trading blocs, and the determination and effects of exchange rates. You also look at the balance of payments and at economic development, including the factors that affect it. The topic links closely to economic policy objectives and to the financial sector. Examiners expect tariff and exchange rate diagrams, accurate comparative advantage reasoning and evaluation of the costs and benefits of globalisation and trade restrictions.
What you need to know
- Globalisation Causes include falling transport and communication costs, trade liberalisation and the growth of multinational companies. Consequences for consumers, producers, workers, governments and the environment.
- Trade Absolute and comparative advantage, the gains from trade, and the terms of trade (index of export prices / index of import prices x 100).
- Trade policy Tariffs, quotas, export subsidies and other forms of protectionism; free trade areas, customs unions and monetary unions; the role of the WTO.
- Exchange rates Floating, fixed and managed systems. Determinants of exchange rates (interest rates, inflation, speculation, trade flows) and the effects of appreciation and depreciation, including the Marshall-Lerner condition and the J-curve.
- Balance of payments The current, capital and financial accounts. Causes of current account imbalances and policies to correct them.
- Development Measures of development, including the HDI, and the factors that help or hinder growth and development in different economies.
Common mistakes in The Global Context
- Basing trade on absolute advantage. Gains from trade depend on comparative advantage, which uses opportunity cost.
- Forgetting the welfare effects in a tariff diagram. Show government revenue and the two deadweight loss triangles.
- Assuming depreciation always improves the trade balance. The Marshall-Lerner condition must hold and the J-curve may cause it to worsen first.
- Placing FDI in the current account. FDI is in the financial account.
- Writing one-sided answers on globalisation. Show winners and losers.
Try three The Global Context exam-style questions
1. Country X produces 50 units of food or 25 units of clothing; Country Y produces 30 units of food or 10 units of clothing. Identify which country should specialise in clothing. (3 marks)
Show the mark scheme answer
Opportunity cost of 1 clothing in X = 2 food; in Y = 3 food; X has the lower opportunity cost and comparative advantage in clothing, so X should specialise in clothing.
2. Explain how an appreciation of the pound may affect UK inflation. (4 marks)
Show the mark scheme answer
Imports become cheaper in pounds, lowering the cost of imported goods and raw materials; cost-push pressures fall, shifting SRAS right; exports become dearer, reducing net exports and AD; both reduce inflationary pressure.
3. Evaluate the use of tariffs to protect domestic industries. (12 marks)
Show the mark scheme answer
Tariffs raise the price of imports, protecting domestic jobs and infant industries; raise government revenue; evaluation: consumers pay higher prices and lose consumer surplus; deadweight welfare loss; retaliation by trading partners; protected firms may become inefficient; WTO rules and trade agreements limit their use; supported judgement.
The Global Context FAQs
What does OCR A Level Economics The Global Context cover?
It covers globalisation, trade and comparative advantage, the terms of trade, trade policy, exchange rates, the balance of payments and economic development.
Which paper is The Global Context examined in?
It is examined in Paper 2, Macroeconomics (H460/02) and may also feature in Paper 3, Themes in Economics.
How do I calculate the terms of trade?
Divide the index of export prices by the index of import prices and multiply by 100. A rise means the terms of trade have improved.
