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GCE MAY 2008 : (A2 2) The International Economy

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ADVANCED General Certificate of Education 2008 Economics assessing Module 4: The International Economy A2E21 Assessment Unit A2 2 [A2E21] FRIDAY 30 MAY, MORNING TIME 1 hour 40 minutes. INSTRUCTIONS TO CANDIDATES Write your Centre Number and Candidate Number on the Answer Booklet provided. Answer Question 1 and any one of Questions 2, 3 or 4. INFORMATION FOR CANDIDATES The total mark for this paper is 80. Quality of written communication will be assessed in parts (a), (d) and (e) of Question 1 and all parts of Questions 2, 3 or 4. Figures in brackets printed down the right-hand side of pages indicate the marks awarded to each question or part question. ADVICE TO CANDIDATES You are advised to take account of the marks for each part question in allocating the available examination time. A2E2S8 4174 You must answer this question. 1 Study the information below and answer the questions which follow. Trade and the balance of payments 4 Per cent of GDP: Balance of payments current account 2 per cent of GDP 0 2 4 6 1970 1975 1980 1985 1990 1995 2000 2005 Exports of goods and services grew by 6.25% in 2006, up from 5% in 2005. While the level of UK exports continues to grow, imports of goods and services also showed strong growth in 2006, up 7% on a year earlier. This growth of imports is set to continue, reflecting the strength of the UK economy. The UK balance of payments on current account includes not only trade in goods and services, but also private and government transfers and the UK s net investment income from overseas. The trading environment for UK firms has changed significantly in the decade from 1995 due to the appreciation of sterling and the rapid growth in cheap exports from China and India. The UK s current account deficit rose from 2.5% of GDP in 2006 to 3% of GDP in 2007. The actual size of the deficit is forecast to rise to 60bn in 2009. This deficit reflects the strength of UK economic growth and the appreciation of sterling. Thankfully, the current account is only one part of the balance of payments. The yawning deficit on the current account is partly offset by significant capital inflows. These inflows consist mainly of Foreign Direct Investment (FDI). The UK is the world s largest recipient of FDI. In the first three quarters of 2006 inflows amounted to 64bn; this was twice what China received for the whole of 2006. Source: Adapted from the Budget Report 2007. A2E2S8 4174 2 (a) Explain what has happened to the UK balance of payments on current account from 1970 to 2007. [6] (b) Explain what is meant by transfers and income in the balance of payments accounts. [4] (c) Explain how the UK balance of payments since 1995 has been affected by (i) the appreciation in the value of sterling against the US dollar [5] (ii) the emergence of China and India as major exporters. [5] (d) The report states that the UK is the major recipient of inward FDI in the world. Analyse some of the factors which might account for this. [8] (e) The deficit on the balance of payments current account is nothing to worry about since it merely reflects the strength of the UK economy. Discuss this view of the current account deficit. A2E2S8 4174 3 [12] [Turn over Answer any one of Questions 2, 3 or 4. 2 (a) Explain what is meant by comparative advantage . [8] (b) Analyse the factors which may improve a country s comparative advantage in international markets. [16] (c) Recently the Conservative Party claimed that UK competitiveness has been adversely affected by government regulation, red tape and fiscal policy. Discuss the view that government interference in the economy inevitably harms international competitiveness. 3 (a) Explain the main economic aims of the European Union (EU). [16] [8] (b) The EU is often considered to be a major contributor to the rapid economic growth of the Republic of Ireland. Consider how the EU might help Northern Ireland increase its rate of economic growth. [16] (c) There has always been opposition within the UK to membership of the EU. Discuss the claim that from the point of view of the economy it would be better for the UK to leave the EU. [16] 4 (a) Outline some of the main ways in which governments could protect domestic industries from foreign competition. [8] (b) United States trade unions have recently called on their government to raise trade barriers. Analyse the likely impact of such a move on the American economy. [16] (c) Some critics argue that, in the long run, globalisation is likely to bring more problems than benefits to both developed and less-developed countries. Examine the validity of this argument. [16] Permission to reproduce all copyright material has been applied for. In some cases, efforts to contact copyright holders may have been unsuccessful and CCEA will be happy to rectify any omissions of acknowledgement in future if notified. A2E2S8 4174 SP (SC/CGW) T59945/2

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Additional Info : Gce Economics May 2008 Assessment Unit A2 2 Module 4: The International Economy
Tags : General Certificate of Education, A Level and AS Level, uk, council for the curriculum examinations and assessment, gce exam papers, gce a level and as level exam papers , gce past questions and answer, gce past question papers, ccea gce past papers, gce ccea past papers

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