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GCE MAY 2007 : (A2 2) The International Economy

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ADVANCED General Certificate of Education 2007 Economics assessing Module 4: The International Economy A2E21 Assessment Unit A2 2 [A2E21] TUESDAY 29 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 c, d, f and g, 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. A2E2S7 3183 You must answer this question. 1 Study the information below and answer the questions which follow. The future of globalisation At last it is official. After stumbling on for months, the world trade talks at Doha in Qatar have collapsed. Some have argued that with the Middle East ablaze, oil prices soaring to record highs, and the American economy cooling, it is silly to worry about the failure of trade talks. After all, globalisation is unstoppable so what if a few officials in Switzerland packed up their brief cases and went home? Many economists, businessmen and politicians believe that it matters a lot. The Doha negotiations were to be an ambitious effort to make globalisation more inclusive. They were meant to help the world s poor by slashing barriers and subsidies in farming, the rich world s most molly-coddled industry. Had the talks been successful, trade in goods in countries around the globe would have increased dramatically. The benefits to an economy from free trade come more from imports than exports. Imports raise the standard of living for consumers and should improve industrial productivity. Indeed the growth in the global economy had been attributed to previous decisions to liberalise world trade. Why then will negotiators not compromise? The divisions between the negotiators are deep. America wanted to slash tariffs, arguing that the best way to help poor countries is through more open markets. However, emerging economies want fewer farm subsidies and lower tariffs in rich countries but refuse to reduce their own barriers, arguing that since they are poor they should not be required to do so. Indeed, some economists would argue that the interests of the poor are best served by more special protection rather than reduced tariffs. Apart from the disagreements about a strategy for helping the poor, rich countries were also unwilling to face down their own powerful protectionist lobbies, especially farmers. In the absence of a multilateral agreement, regional trade agreements and separate development packages are being agreed. Peter Mandelson, the EU trade commissioner, has already suggested a separate development package for the poorest, which would include trade related aid as well as promises on duty and quota free access to rich markets. However, the future for further moves towards free trade does not look promising. Next June sees the expiry of George Bush s Presidential power to authorise trade agreements. Any deals after that will require ratification by Congress. A bleaker economic climate with a slowdown in global growth, western complaints about theft of intellectual property by developing countries and a fear of China could change attitudes towards freer trade. This would make it more difficult to revive the failed trade talks in the future. If that is the case we will all be poorer. Source: Adapted from The Economist 29th July 2006. A2E2S7 3183 2 (a) Explain what is meant by the term globalisation. [3] (b) Explain why globalisation might be thought of as unstoppable . [3] (c) Analyse how imports may benefit an economy. [6] (d) Using an appropriate diagram, explain how slashing tariffs should help poor countries. [6] (e) Apart from tariffs, explain two other ways in which trade can be restricted. [4] (f) Analyse some of the factors which might make it difficult to reduce trade barriers in future. [6] (g) Discuss the view expressed at the start of the article that the failure of the trade talks is nothing to worry about. [12] A2E2S7 3183 3 [Turn over Answer any one of Questions 2, 3 or 4. 2 (a) Outline the main features of the Single European Market. [8] (b) It is claimed that as a result of Romania and Bulgaria becoming full members of the EU the UK could face an inflow of about half a million migrants. Analyse the impact of such an inflow of people on the UK economy. [16] (c) Recently the mayor of a city in Poland started a campaign to bring emigrants home because he claimed that emigration of citizens is disastrous for the local economy. Discuss the validity of such a claim. [16] 3 (a) Outline some of the possible causes of a balance of payments current account deficit. [8] (b) Analyse two policies, apart from supply side measures, which the government could use to reduce a balance of payments current account deficit. [16] (c) Evaluate the effectiveness of some of the supply side measures which a government may use to improve the balance of payments performance in the long run. [16] 4 (a) Explain the difference between a free trade area and a customs union. [8] (b) Analyse how a customs union may both create and divert trade. [16] (c) The Common Agricultural Policy of the EU should be abolished because it has promoted economic inefficiency. Examine this view of the CAP. [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. A2E2S7 3183 SP (NF) T39070/2

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Additional Info : Gce Economics May 2007 Assessment Unit A2 2Module 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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