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Topical›Economics 9708›International economic issues (AS Level)›Protectionism›Paper 1

Protectionism — Paper 1 · A Level Economics 9708

6.2· 172 questions · 172 marks · 206 min · 2005–2025· Multiple choice

Every Cambridge A Level Economics Paper 1 question on protectionism, laid out as 47 A4 pages with the mark scheme below. Nothing is left out. Free to read, no account.

QuestionsMark scheme
Different topic or paper

Questions47 pages

Question 1: Which of the following will increase a country’s protection against imports? A an appreciation of its exchange rate B an increase in its in…Question 2: Assume the price elasticity of demand for best-quality French wine is zero. What would be the effect in New Zealand if the New Zealand gove…Question 3: The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on th…Question 4: What would reduce an economy’s protection against the import of cars? A a lower exchange rate B a higher quota of imported cars C a higher …Question 5: Which method of protection would a government be most likely to use to increase the country’s exports? A exchange control B quotas C subsid…1 / 47
Question 6: What would be an economic benefit to a country of imposing a tariff on imported goods? A It would increase global productivity. B It would …Question 7: When would the sale of cheap exports definitely be classed as dumping? A if the exports were produced profitably at a low price in the expo…Question 8: A government removes the tariff on a product. What will be the change in domestic production? D domestic supply P price P1 world supply wit…Question 9: What will be the immediate effect of the removal of tariffs on imported consumer goods? A a decrease in the cost of living B a decrease in …Question 10: Which feature is found in both a customs union and a free trade area? A a common currency B a common external tariff C freedom from interna…2 / 47
Question 11: Japan introduces import quotas on consumer durables imported from Malaysia. These goods have a high price elasticity of demand. What effect…Question 12: Which statement about economic integration is correct? A A customs union has a common currency. B A customs union has a common external tar…Question 13: A government has been protecting its domestic car industry with a quota on imported cars. It then removes the quota and replaces it with a …Question 14: A government has been protecting its domestic car industry with a quota on imported cars. It then removes the quota and replaces it with a …3 / 47
Question 15: A group of countries decides to change from being a customs union to being an economic union. What additional feature will this give the gr…Question 16: Steel is produced in a number of countries, including China, Japan and the US. It is used in the manufacture of cars. The US protects its d…Question 17: The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on th…Question 18: What is found in a customs union but not a free trade area? A a common currency B a common external tariff C fixed exchange rates D free mo…4 / 47
Question 19: In 2008 the Chinese government was under pressure from other countries to reduce its current account surplus on its balance of payments. Wh…Question 20: Steel is produced in a number of countries, including China, Japan and the US. It is used in the manufacture of cars. The US protects its d…Question 21: The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on th…Question 22: What is found in a customs union but not a free trade area? A a common currency B a common external tariff C fixed exchange rates D free mo…5 / 47
Question 23: In 2008 the Chinese government was under pressure from other countries to reduce its current account surplus on its balance of payments. Wh…Question 24: Steel is produced in a number of countries, including China, Japan and the US. It is used in the manufacture of cars. The US protects its d…Question 25: The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on th…Question 26: What is found in a customs union but not a free trade area? A a common currency B a common external tariff C fixed exchange rates D free mo…6 / 47
Question 27: In 2008 the Chinese government was under pressure from other countries to reduce its current account surplus on its balance of payments. Wh…Question 28: An argument against trade protection is that it will increase A competition for domestic industries. B domestic price levels. C opportuniti…Question 29: An argument against trade protection is that it will increase A competition for domestic industries. B domestic price levels. C opportuniti…Question 30: An argument against trade protection is that it will increase A competition for domestic industries. B domestic price levels. C opportuniti…Question 31: Which measure would encourage domestic production? A reduction in A the safety standards for imports. B the size of import quotas. C the su…7 / 47
Question 32: A government removes the tariff on a product as shown in the diagram. D domestic supply P price P1 world supply with tariff P2 world supply…Question 33: Country X joins an existing customs union comprising countries Y and Z. Country W remains outside the customs union. Both X’s initial tarif…Question 34: Which measure would encourage domestic production? A reduction in A the safety standards for imports. B the size of import quotas. C the su…8 / 47
Question 35: The diagram shows that the imposition of a tariff raises price from $10 to $14. domestic supply D price $ 14 10 domestic demand S 0 20 30 7…Question 36: A government decides to reduce the quota on imported cars from 2000 to 1000 per year. What is likely to happen? A The balance of trade may …Question 37: Which statement about the impact of a tariff and a quota is correct? A A tariff leaves the quantity of imports unchanged while a quota decr…Question 38: A government decides to reduce the quota on imported cars from 2000 to 1000 per year. What is likely to happen? A The balance of trade may …9 / 47
Question 39: Which argument supports trade protection? A It might decrease domestic prices. B It might help new industries. C It might increase competit…Question 40: The diagram shows that the imposition of a tariff raises price from $10 to $14. domestic supply D price $ 14 10 domestic demand S 0 20 30 7…Question 41: Russia is a significant exporter of wheat. In 2010 there was a poor harvest and the Russian government stopped all exports of wheat to ensu…Question 42: Why might a government decide to reduce tariffs on agricultural imports? A to develop greater specialisation B to increase government reven…10 / 47
Question 43: A government believes that it can reduce its trade deficit by the introduction of a tax on its main export. When is this likely to be most …Question 44: When is the imposition of a tariff on a good most likely to reduce a trade deficit? A when the country has a potential comparative advantag…Question 45: Which statement about the impact of a quota and a tariff is correct? A A quota benefits the seller of the imports while a tariff raises gov…Question 46: The diagram shows the effects of introducing an import tariff on wheat in a country. R domestic supply price of S wheat PT world supply + t…Question 47: What is a feature of a customs union? A the fixing of quotas for its members B the introduction of a common currency C the joint setting of…11 / 47
Question 48: What is the most likely aim of a government that increases the level of tariffs on imported manufactured goods? A a fall in interest rates …Question 49: What is a characteristic of a customs union but is not of a free trade area? A abolition of import quotas B abolition of tariffs between me…Question 50: What would be least likely to restrict international trade? A increasing shipping charges B more complex customs procedures C rising levels…Question 51: The diagram shows a market for a good which is supplied partly from domestic production and partly from imports. Sh shows domestic supply a…12 / 47
Question 52: The diagram shows a country’s domestic supply of, and demand for, a commodity that it both consumes and exports. S WP2 WP1 price D O W Y X …Question 53: Which two groups within a country are likely to benefit from the introduction of tariffs? A consumers and shareholders B declining industri…Question 54: A country is a major producer of cotton. Its government imposes a tax on exports of its cotton. What effect will this have on the price of …13 / 47
Question 55: A country produces washing machines. The government lowered both the tax on washing machines produced in its country and the quota on impor…Question 56: The diagram shows the effect on the quantity of an import to the domestic market of the removal of a tariff that reduces the import’s price…Question 57: In their transition to market economies some former command economies have adopted a gradual approach. This has meant continuing with some …14 / 47
Question 58: What would not be a reason for a government to impose a quota on imports? A to prevent dumping B to raise tax revenue C to reduce a balance…Question 59: The European Union imposes a quota on the volume of garments imported from China. What is likely to be the effect on the prices received by…Question 60: The diagram shows the effect of removing a tariff on imports of sugar into a country. domestic supply price of sugar T Y PT world supply + …15 / 47
Question 61: The diagram shows the demand for and supply of a foreign-made mobile (cell) phone. The initial position in the domestic market is X. S E S1…Question 62: What is meant by dumping in international trade? A selling products in a foreign market at a price below cost B selling products in a forei…Question 63: As a result of a trade agreement, toys produced in Africa can be supplied to European markets. These toys are much cheaper than similar toy…16 / 47
Question 64: To reduce a deficit on the current account of the balance of payments, a government imposes a limit on the foreign exchange its people and …Question 65: What is not usually a motive for a country to use protection in international trade? A to increase global economic welfare B to prevent the…Question 66: A government decides to increase a quota on an imported good. What is likely to happen? A The demand for the good will fall. B The good wil…17 / 47
Question 67: In the diagram, D is a country’s demand curve for an imported good. The country’s government imposes an import tariff equal to PWPC on the …Question 68: How might trade protection reduce a country’s ability to compete in export markets? A by increasing firms’ profit margins on goods supplied…Question 69: What is found in an economic union but not in a customs union? A a common external tariff on trade with non-member countries B an absence o…Question 70: What will rise as a consequence of removing a tariff? A domestic consumer surplus B domestic price C domestic producer surplus D government…18 / 47
Question 71: A group of people in a country start a campaign for free trade because they believe that it will benefit the economy. Which argument in fav…Question 72: A particular good in the Barbados market could be supplied by domestic producers, or producers in Trinidad & Tobago, or producers in the US…Question 73: The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on th…19 / 47
Question 74: Trade relations between two countries have gone through four stages. At which stage was a customs union established? A The countries remove…Question 75: A government removes the tariff on a product as shown in the diagram. D domestic supply P price P1 world supply with tariff P2 world supply…Question 76: What is the main argument a government of a small country might use in times of a worsening worldwide recession to justify an increase in i…Question 77: What is not associated with greater economic integration between countries? A increased financial flows B increased quotas C increased trad…20 / 47
Question 78: Which statement is not a valid justification for an import tariff? A A tariff will prevent imported inflation. B A tariff will prevent unfa…Question 79: The diagram shows a market for a good which is supplied partly from domestic production and partly from imports. Sh1 shows domestic supply …Question 80: Why might a government decide to increase the quota set on imports? A to cut a deficit on the trade balance in goods and services B to enco…21 / 47
Question 81: The diagram shows the market for coffee in a small coffee-producing country. The domestic supply of coffee is represented by Sd. The supply…Question 82: A government wants to use trade protection both to improve its trade performance and to raise government revenue. Which policy will help it…Question 83: An economy with a long history of extensive barriers to trade decides to switch to totally free trade. What is most likely to increase in t…Question 84: The US President signed a trade agreement which allowed more duty-free access to the US market for Latin American and Caribbean countries. …22 / 47
Question 85: Which statement is not a valid reason why a country may impose protectionist measures? A to allow a newly developed domestic industry to gr…Question 86: Four countries, A, B, C and D, trade internationally. Each circle in the diagram represents a free trade area between the countries within …Question 87: A small trading country decides on a policy of import substitution by producing for itself. What is the most likely reason for this policy?…Question 88: Which government policy could be considered as a protectionist policy? A an imposition of controls on capital outflows from the economy B f…23 / 47
Question 89: The diagram shows that the imposition of a tariff raises a good’s world price from $10 to $14. domestic supply price D $ 14 10 domestic dem…Question 90: Which government measure would reduce protectionism? A an increase in product safety standards B an increase in subsidies to domestic firms…Question 91: What is not an example of protectionism? A a ban on the imports of chicken products B import tariffs on agricultural products C maximum sup…Question 92: Country X forms a customs union with country Y. X then ceases to produce its own cars and instead imports cars from Y. Country Y diverts so…24 / 47
Question 93: In 2014, Poland was the world’s largest exporter of apples. 55% of the crop went to Russia. Then Russia banned the imports. What would not …Question 94: The diagram shows that the imposition of a tariff raises a product’s world price from $10 to $14. domestic supply price D $ 14 10 domestic …Question 95: What is a disadvantage when a quota replaces a tariff to reduce imports? A It is harder to anticipate its impact. B It is less effective at…Question 96: What is present in a customs union but not in a free trade area? A a common external tariff with the rest of the world B a common monetary …25 / 47
Question 97: Which argument in favour of protectionism is not generally regarded as economically valid? A It increases the standard of living of the pop…Question 98: In the diagram, D is a country’s demand curve for an imported good. The country’s government imposes an import tariff equal to PWPC on the …Question 99: Which policy is not likely to help reduce a balance of payments deficit? A an increase in expenditure promoting locally produced goods B an…26 / 47
Question 100: In the diagram, D and S represent the domestic demand and supply curves for a product. Sw represents world supply of the product at a world…Question 101: What is the difference between a customs union and a free trade area? A Only the customs union has a common external tariff with the rest o…Question 102: Which statement about trade protection is correct? A A tariff will result in a greater decrease in demand for an import the lower its price…27 / 47
Question 103: A particular good in the Barbados market could be supplied by domestic producers, or producers in Trinidad and Tobago, or producers in the …Question 104: What would reduce an economy’s protection against the import of cars? A a higher quota of imported cars B a higher subsidy for domestic car…Question 105: If an economy experiences a persistent balance of trade deficit, it may choose to place tariffs on imports of manufactured goods. When migh…Question 106: Which action increases and which action decreases the level of protectionism? increases protectionism decreases protectionism A imposing an…28 / 47
Question 107: Country M imposes a tariff on imports of steel. Which price elasticity values will result in the smallest reduction in steel imports into M…Question 108: The diagram shows the domestic and world demand and supply for a good. S (domestic) price P3 P2 world supply + tariff P1 world supply D (do…Question 109: What is a characteristic of a customs union but not of a free trade area? A a common external tariff B a common tariff between member count…29 / 47
Question 110: In the diagram, Dd and Sd represent the domestic demand and supply curves for a product. Sw represents world supply of the product when the…30 / 47
Question 111: In the diagram Sd is the domestic supply of a product, Sw is the world supply and Dd is the domestic demand for the product. Sd price ($) 2…Question 112: Two countries trade with one another without any forms of protection. They also impose a common external tariff on the imports from all oth…Question 113: Which type of import control allows a country to develop a potential comparative advantage in a particular good? A a quota that protects jo…31 / 47
Question 114: The tariff on Indian goods entering the US falls from 10% to 5%. What will be the most likely effect on the producer and consumer surplus i…Question 115: Industrialised countries X and Y trade with each other. Country X imposes a general tariff of 20% on imports from country Y. In which circu…Question 116: The diagram shows the imposition of an import tariff. SW is world supply. SW + tax is world supply after the tariff is imposed. Sdomestic p…32 / 47
Question 117: The diagram shows the effect of introducing an import quota on the market for good X. Sdomestic Sdomestic + quota price of X pQ p Sworld Dd…Question 118: Country X joins a customs union with country Y and will remove the tariff on its imports of good M from country Y. Under which conditions w…Question 119: When will the imposition of a tariff by a country on the goods and services of its major trading partners reduce the country’s expenditure …33 / 47
Question 120: What is not an example of protectionism? A the European Union (EU) requiring goods imported into member states to meet safety standards B t…Question 121: The diagram shows the effect of a tariff on a product. price domestic supply P2 world supply plus tariff P1 world supply domestic demand O …Question 122: The European Union consists of a group of countries with free trade between its members and a common external tariff on trade with non-memb…Question 123: What is not an example of protectionism? A export subsidies B import subsidies C quotas D tariffs34 / 47
Question 124: Which measure would not be part of a government subsidy to protect domestic producers from competition? A import quotas B interest-free loa…Question 125: In 2018 the United States (US) government introduced tariffs on a wide range of imports from China. Which type of policy was the US governm…Question 126: The diagram shows the imposition of a tariff on imports. domestic supply price U T world supply after tariff P2 P1 world supply before tari…Question 127: In which economic context is the term ‘protectionism’ usually applied? A the protection of consumers against excessive prices B the protect…35 / 47
Question 128: The diagram shows the effect of removing a tariff on imports of good X into country Y. SX domestic price of X (US$) 20 SX world + tariff 10…Question 129: As part of its trade policy, a government subsidises the cost of machinery used to manufacture goods for export. How will this affect the b…Question 130: The diagram shows the effect of the introduction of a tariff on good X by country Y. SX domestic price of X (US$) 20 SX world + tariff 10 S…36 / 47
Question 131: What is not an aim of protectionism? A to improve balance of trade B to increase price of exports C to protect infant industries D to reduc…Question 132: The world trade price of cars in country Y is US$10 000. At this price domestic car producers supply 100 000 cars to the market and domesti…Question 133: Which statement about trade protection is correct? A A tariff results in a greater decrease in demand for an import the lower is its price …Question 134: Which argument for protection would be most relevant if the government of country X decided to exercise voluntary export restraint in its t…37 / 47
Question 135: The diagram shows the effect of the United States (US) imposing a tariff on the import of steel in 2018. Z domestic supply of steel price o…Question 136: A government decides to increase a quota on an imported good. What is likely to happen? A The demand for the good will fall. B The good wil…Question 137: Country X places a tariff of 20% on steel products imported from country Y. Country Y retaliates with a 20% tariff on computers imported fr…38 / 47
Question 138: The diagram shows the effects of the imposition of a tariff on an internationally-traded good. Sdom is the supply and D the demand in count…Question 139: Which policy would be likely to increase inflation? A an increase in income tax B an increase in interest rates C limiting the amount banks…Question 140: A government removes its quota on imported laptops. Assuming a normal demand curve and upward-sloping supply curve for laptops, what are th…39 / 47
Question 141: What is not a form of protectionism? A embargoes B increase in sales tax (VAT) C subsidies on goods for export D voluntary export restraintsQuestion 142: The diagram shows the change in the supply curve of imports, S–S1 to curve S–S2, after the introduction by the government of a trade protec…Question 143: Why might a country’s government impose a tax on fuel exports? A to encourage domestic refineries to increase production B to improve the c…Question 144: A small country imposes no tariffs and has a perfectly elastic supply of smartphones from the rest of the world. Which statement is correct…40 / 47
Question 145: In a recent year, Japanese car manufacturers agreed to limit exports of cars to the USA. Which form of protectionism is this? A an embargo …Question 146: Which statement correctly describes how an import quota works? A It is a ban on the import of demerit goods. B It imposes strict product re…Question 147: The diagram shows the demand and supply curves for solar panels in the US. In 2018, the US put a tariff on imported solar panels. price of …Question 148: Country X joins a customs union with country Y and will remove the tariff on its imports of good M from country Y. Under which conditions w…41 / 47
Question 149: The diagram shows the effect of introducing a tariff on a product. price domestic supply P2 world supply plus tariff P1 world supply domest…Question 150: Which government policy is most likely to cause expenditure switching that will benefit a country’s current account? A increasing import qu…Question 151: A government removes the tariff on a product, as shown. D domestic supply price P P1 world supply with tariff P2 world supply without tarif…42 / 47
Question 152: Which measure is aimed directly at promoting international trade? A decreasing existing quotas B increasing interest rates C subsidies paid…Question 153: The diagram shows that the imposition of a tariff raises a product’s world price from $10 to $14. domestic supply price $ 14 10 domestic de…Question 154: The diagram shows the market for both domestic and imported computers for an economy. The world price is p1. price Sdom S2 Sdom + imp p2 p1…43 / 47
Question 155: What is not an example of protectionism? A export subsidies B import subsidies C quotas D tariffsQuestion 156: Which policy would not be an argument for the use of import tariffs? A They are an effective way of raising revenue. B They improve the bal…Question 157: A government wants to protect its textile industry from imports. Which policy is likely to have the least impact on the import of textiles?…Question 158: What is an unintended consequence of the US government restricting imports of cheap Chinese steel? A US importers of steel pay lower prices…Question 159: A country imports natural gas for which it has price-inelastic demand. What is the effect if that country imposes an import duty on the gas…Question 160: A government decides to place a tariff on imports of raw materials. Which statement about the impact of the tariff is correct? A It will in…44 / 47
Question 161: Which policy is most likely to reduce a balance of payments deficit without causing inflation? A decreased import quotas B depreciation of …Question 162: What is not an example of protectionism? A the European Union (EU) requiring goods imported into member states to meet safety standards B t…Question 163: A country subsidises domestic production of manufactured goods. What is the most likely outcome? A a rise in economic growth B a rise in im…Question 164: Two statements describing forms of protectionism a government can use are listed. 1 There is a total ban on imports. 2 All imported goods h…45 / 47
Question 165: The diagram shows the impact of a government introducing an export subsidy for its domestic producers of oil. domestic supply domestic supp…Question 166: Which statement correctly describes a tariff? A It is a complete ban on imports. B It is a minimum price for domestic producers. C It is a …Question 167: A country increases its spending on education and training. It pays for this by reducing unemployment benefit payments and increasing taxes…Question 168: Which statement is not a valid reason why a country may impose protectionist measures? A to allow a newly developed domestic industry to gr…46 / 47
Question 169: A country is experiencing a deficit on the current account of its balance of payments. Which policy decision could reduce the deficit? A de…Question 170: Which argument in favour of protectionism is not generally regarded as economically valid? A Once the protected industry becomes establishe…Question 171: A government increases the import quota of cars. What is the likely effect of this? A jobs will be created in the domestic car industry B p…Question 172: The diagram shows the effect of a government removing the tariff on imports of rice into its country. Sdomestic price of rice W V P1 Sworld…47 / 47

Mark scheme172 answers

Answers below. Sit the paper first if you are practising.

Pastlit

Economics 9708 · Protectionism — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

1C1
2C1
3A1
4B1
5C1
6C1
7D1
8A1
9A1
10C1
11C1
12B1
13B1
14B1
15C1
16B1
17A1
18B1
19A1
20B1
21A1
22B1
23A1
24B1
25A1
26B1
27A1
28B1
29B1
30B1
31B1
32A1
33B1
34B1
35B1
36A1
37B1
38A1
39B1
40B1
41A1
42A1
43C1
44A1
45A1
46B1
47D1
48C1
49D1
1 / 4

Pastlit

Economics 9708 · Protectionism — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

50C1
51C1
52C1
53D1
54B1
55D1
56C1
57A1
58B1
59D1
60—1
61C1
62A1
63D1
64A1
65A1
66D1
67A1
68B1
69D1
70A1
71D1
72C1
73A1
74C1
75A1
76A1
77B1
78A1
79C1
80D1
81B1
82D1
83A1
84B1
85C1
86B1
87C1
88D1
89A1
90C1
91C1
92B1
93C1
94C1
95B1
96A1
97A1
98A1
2 / 4

Pastlit

Economics 9708 · Protectionism — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

99B1
100B1
101A1
102D1
103C1
104A1
105D1
106A1
107A1
108B1
109A1
110A1
111B1
112A1
113B1
114A1
115B1
116C1
117A1
118C1
119B1
120B1
121D1
122D1
123B1
124A1
125B1
126D1
127C1
128B1
129B1
130D1
131B1
132A1
133D1
134C1
135C1
136D1
137D1
138B1
139D1
140A1
141B1
142C1
143C1
144B1
145D1
146D1
147C1
3 / 4

Pastlit

Economics 9708 · Protectionism — Paper 1

A Level · topical answer key — answer key (teacher use)

Question

Answer

Marks

148B1
149D1
150D1
151A1
152C1
153C1
154D1
155B1
156D1
157B1
158B1
159A1
160A1
161C1
162B1
163A1
164C1
165B1
166D1
167C1
168C1
169D1
170D1
171B1
172C1
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Questions as text

Q1 · Which of the following will increase a country’s protection against imports? 9708/11 Oct/Nov 2005

20 Which of the following will increase a country’s protection against imports? A an appreciation of its exchange rate B an increase in its inflation rate C a reduction in the size of existing import quotas D a reduction in subsidies to domestic producers

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2005

Q2 · Assume the price elasticity of demand for best-quality French wine is zero 9708/11 May/June 2006

11 Assume the price elasticity of demand for best-quality French wine is zero. What would be the effect in New Zealand if the New Zealand government imposed a tariff on such wine? A The price of the wine would rise by an amount less than the tariff. B Demand for the wine would fall. C Expenditure on the wine would rise. D Sales of the wine would cease.

1 marks

Answer: C

This question in 9708/11 May/June 2006

Q3 · The supply of an imported good is shown by curve S 9708/11 May/June 2006

20 The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on the good? A B S C D price O quantity

1 marks

Answer: A

This question in 9708/11 May/June 2006

Q4 · What would reduce an economy’s protection against the import of cars? 9708/11 Oct/Nov 2006

20 What would reduce an economy’s protection against the import of cars? A a lower exchange rate B a higher quota of imported cars C a higher tariff on imported cars D a higher subsidy for domestic car producers

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2006

Q5 · Which method of protection would a government be most likely to use to increase the… 9708/11 May/June 2007

20 Which method of protection would a government be most likely to use to increase the country’s exports? A exchange control B quotas C subsidies D tariffs

1 marks

Answer: C

This question in 9708/11 May/June 2007

Q6 · What would be an economic benefit to a country of imposing a tariff on imported goods? 9708/11 Oct/Nov 2007

20 What would be an economic benefit to a country of imposing a tariff on imported goods? A It would increase global productivity. B It would make the country’s exports more competitive. C It would put pressure on foreign suppliers to reduce their prices. D It would reduce the prices paid by consumers for imported goods.

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2007

Q7 · When would the sale of cheap exports definitely be classed as dumping? 9708/11 May/June 2008

20 When would the sale of cheap exports definitely be classed as dumping? A if the exports were produced profitably at a low price in the exporting country B if the exports were the result of a surplus caused by favourable weather conditions C if the exports were the result of improved technology that led to capital-intensive production D if the exports were the result of government subsidies to producers that made loss-making sales profitable

1 marks

Answer: D

This question in 9708/11 May/June 2008

Q8 · A government removes the tariff on a product 9708/11 May/June 2008

21 A government removes the tariff on a product. What will be the change in domestic production? D domestic supply P price P1 world supply with tariff P2 world supply without tariff S domestic demand O V W X Y Z quantity A a reduction of WV B a reduction of XV C a reduction of XW D a reduction of ZY

1 marks

Answer: A

This question in 9708/11 May/June 2008

Q9 · What will be the immediate effect of the removal of tariffs on imported consumer goods? 9708/11 Oct/Nov 2008

20 What will be the immediate effect of the removal of tariffs on imported consumer goods? A a decrease in the cost of living B a decrease in free trade C an increase in customs revenues received by the government D an increase in the level of domestic employment

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2008

Q10 · Which feature is found in both a customs union and a free trade area? 9708/11 Oct/Nov 2008

21 Which feature is found in both a customs union and a free trade area? A a common currency B a common external tariff C freedom from internal trade barriers D uniform tax rates

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2008

Q11 · Japan introduces import quotas on consumer durables imported from Malaysia 9708/11 May/June 2009

20 Japan introduces import quotas on consumer durables imported from Malaysia. These goods have a high price elasticity of demand. What effect is this likely to have on the prices paid for these goods by Japanese consumers and on the revenues received by Malaysian producers? change in prices paid change in revenues by Japanese received by Malaysian consumers producers A decrease uncertain B decrease increase C increase decrease D increase uncertain

1 marks

Answer: C

This question in 9708/11 May/June 2009

Q12 · Which statement about economic integration is correct? 9708/11 May/June 2009

21 Which statement about economic integration is correct? A A customs union has a common currency. B A customs union has a common external tariff. C A free trade area has internal trade barriers. D A free trade area has no external trade barriers.

1 marks

Answer: B

This question in 9708/11 May/June 2009

Q13 · A government has been protecting its domestic car industry with a quota on imported cars 9708/11 Oct/Nov 2009

20 A government has been protecting its domestic car industry with a quota on imported cars. It then removes the quota and replaces it with a subsidy to domestic car producers. How will this change affect the price of cars and the level of consumer choice? price of cars level of choice A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2009

Q14 · A government has been protecting its domestic car industry with a quota on imported cars 9708/12 Oct/Nov 2009

19 A government has been protecting its domestic car industry with a quota on imported cars. It then removes the quota and replaces it with a subsidy to domestic car producers. How will this change affect the price of cars and the level of consumer choice? price of cars level of choice A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2009

Q15 · A group of countries decides to change from being a customs union to being an economic… 9708/12 May/June 2010

20 A group of countries decides to change from being a customs union to being an economic union. What additional feature will this give the group? A a common external quota on imports from non-members B a common external tariff on imports from non-members C the removal of restrictions on the movement of capital and labour between members D the removal of tariffs and quotas on products exchanged between members

1 marks

Answer: C

This question in 9708/12 May/June 2010

Q16 · Steel is produced in a number of countries, including China, Japan and the US 9708/11 Oct/Nov 2010

19 Steel is produced in a number of countries, including China, Japan and the US. It is used in the manufacture of cars. The US protects its domestic steel industry by imposing high tariffs on foreign steel imports. Which two groups would benefit from the removal of the US tariffs? A Chinese steel producers and Japanese car manufacturers B Japanese steel producers and US car manufacturers C US steel producers and Chinese steel workers D the US government and Japanese steel workers

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2010

Q17 · The supply of an imported good is shown by curve S 9708/11 Oct/Nov 2010

20 The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on the good? A B S C price D O quantity

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2010

Q18 · What is found in a customs union but not a free trade area? 9708/11 Oct/Nov 2010

21 What is found in a customs union but not a free trade area? A a common currency B a common external tariff C fixed exchange rates D free movement of labour

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2010

Q19 · In 2008 the Chinese government was under pressure from other countries to reduce its… 9708/11 Oct/Nov 2010

30 In 2008 the Chinese government was under pressure from other countries to reduce its current account surplus on its balance of payments. Which combination of Chinese measures would help to reduce China’s current account surplus? Chinese subsidies to Chinese rate of tariffs the country’s exporters A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2010

Q20 · Steel is produced in a number of countries, including China, Japan and the US 9708/12 Oct/Nov 2010

19 Steel is produced in a number of countries, including China, Japan and the US. It is used in the manufacture of cars. The US protects its domestic steel industry by imposing high tariffs on foreign steel imports. Which two groups would benefit from the removal of the US tariffs? A Chinese steel producers and Japanese car manufacturers B Japanese steel producers and US car manufacturers C US steel producers and Chinese steel workers D the US government and Japanese steel workers

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2010

Q21 · The supply of an imported good is shown by curve S 9708/12 Oct/Nov 2010

20 The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on the good? A B S C price D O quantity

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2010

Q22 · What is found in a customs union but not a free trade area? 9708/12 Oct/Nov 2010

21 What is found in a customs union but not a free trade area? A a common currency B a common external tariff C fixed exchange rates D free movement of labour

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2010

Q23 · In 2008 the Chinese government was under pressure from other countries to reduce its… 9708/12 Oct/Nov 2010

30 In 2008 the Chinese government was under pressure from other countries to reduce its current account surplus on its balance of payments. Which combination of Chinese measures would help to reduce China’s current account surplus? Chinese subsidies to Chinese rate of tariffs the country’s exporters A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2010

Q24 · Steel is produced in a number of countries, including China, Japan and the US 9708/13 Oct/Nov 2010

18 Steel is produced in a number of countries, including China, Japan and the US. It is used in the manufacture of cars. The US protects its domestic steel industry by imposing high tariffs on foreign steel imports. Which two groups would benefit from the removal of the US tariffs? A Chinese steel producers and Japanese car manufacturers B Japanese steel producers and US car manufacturers C US steel producers and Chinese steel workers D the US government and Japanese steel workers

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2010

Q25 · The supply of an imported good is shown by curve S 9708/13 Oct/Nov 2010

19 The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on the good? A B S C price D O quantity

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2010

Q26 · What is found in a customs union but not a free trade area? 9708/13 Oct/Nov 2010

20 What is found in a customs union but not a free trade area? A a common currency B a common external tariff C fixed exchange rates D free movement of labour

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2010

Q27 · In 2008 the Chinese government was under pressure from other countries to reduce its… 9708/13 Oct/Nov 2010

29 In 2008 the Chinese government was under pressure from other countries to reduce its current account surplus on its balance of payments. Which combination of Chinese measures would help to reduce China’s current account surplus? Chinese subsidies to Chinese rate of tariffs the country’s exporters A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2010

Q28 · An argument against trade protection is that it will increase A competition for domestic… 9708/11 May/June 2011

20 An argument against trade protection is that it will increase A competition for domestic industries. B domestic price levels. C opportunities for domestic infant industries. D the current account deficit.

1 marks

Answer: B

This question in 9708/11 May/June 2011

Q29 · An argument against trade protection is that it will increase A competition for domestic… 9708/12 May/June 2011

19 An argument against trade protection is that it will increase A competition for domestic industries. B domestic price levels. C opportunities for domestic infant industries. D the current account deficit.

1 marks

Answer: B

This question in 9708/12 May/June 2011

Q30 · An argument against trade protection is that it will increase A competition for domestic… 9708/13 May/June 2011

18 An argument against trade protection is that it will increase A competition for domestic industries. B domestic price levels. C opportunities for domestic infant industries. D the current account deficit.

1 marks

Answer: B

This question in 9708/13 May/June 2011

Q31 · Which measure would encourage domestic production? 9708/11 Oct/Nov 2011

20 Which measure would encourage domestic production? A reduction in A the safety standards for imports. B the size of import quotas. C the subsidies on home produced goods. D the time taken to process import paperwork.

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2011

Q32 · A government removes the tariff on a product as shown in the diagram 9708/12 Oct/Nov 2011

19 A government removes the tariff on a product as shown in the diagram. D domestic supply P price P1 world supply with tariff P2 world supply without tariff S domestic demand O V W X Y Z quantity What will be the change in domestic production? A a reduction of WV B a reduction of XV C a reduction of XW D a reduction of ZY

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2011

Q33 · Country X joins an existing customs union comprising countries Y and Z 9708/12 Oct/Nov 2011

20 Country X joins an existing customs union comprising countries Y and Z. Country W remains outside the customs union. Both X’s initial tariff and W’s tariff are at the same level as the customs union’s common external tariff. What is likely to be the effect on trade flows when X joins the customs union? trade between X and W trade between Y and Z A unchanged decrease B decrease decrease C unchanged increase D decrease increase

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2011

Q34 · Which measure would encourage domestic production? 9708/13 Oct/Nov 2011

18 Which measure would encourage domestic production? A reduction in A the safety standards for imports. B the size of import quotas. C the subsidies on home produced goods. D the time taken to process import paperwork.

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2011

Q35 · The diagram shows that the imposition of a tariff raises price from $10 to $14 9708/11 May/June 2012

21 The diagram shows that the imposition of a tariff raises price from $10 to $14. domestic supply D price $ 14 10 domestic demand S 0 20 30 70 100 quantity (millions) What is the value of tax revenue raised? A $80 million B $160 million C $320 million D $400 million

1 marks

Answer: B

This question in 9708/11 May/June 2012

Q36 · A government decides to reduce the quota on imported cars from 2000 to 1000 per year 9708/11 May/June 2012

27 A government decides to reduce the quota on imported cars from 2000 to 1000 per year. What is likely to happen? A The balance of trade may improve. B The demand for the good will increase. C The good will become cheaper. D The government’s revenue will decline.

1 marks

Answer: A

This question in 9708/11 May/June 2012

Q37 · Which statement about the impact of a tariff and a quota is correct? 9708/12 May/June 2012

21 Which statement about the impact of a tariff and a quota is correct? A A tariff leaves the quantity of imports unchanged while a quota decreases the quantity of imports. B A tariff raises government revenue while a quota benefits the seller of the imports. C A tariff raises the price of imports while a quota leaves import prices unchanged. D A tariff shifts the supply curve of imports while a quota shifts the demand curve for imports.

1 marks

Answer: B

This question in 9708/12 May/June 2012

Q38 · A government decides to reduce the quota on imported cars from 2000 to 1000 per year 9708/12 May/June 2012

27 A government decides to reduce the quota on imported cars from 2000 to 1000 per year. What is likely to happen? A The balance of trade may improve. B The demand for the good will increase. C The good will become cheaper. D The government’s revenue will decline.

1 marks

Answer: A

This question in 9708/12 May/June 2012

Q39 · Which argument supports trade protection? 9708/13 May/June 2012

20 Which argument supports trade protection? A It might decrease domestic prices. B It might help new industries. C It might increase competition. D It might increase specialisation.

1 marks

Answer: B

This question in 9708/13 May/June 2012

Q40 · The diagram shows that the imposition of a tariff raises price from $10 to $14 9708/13 May/June 2012

21 The diagram shows that the imposition of a tariff raises price from $10 to $14. domestic supply D price $ 14 10 domestic demand S 0 20 30 70 100 quantity (millions) What is the value of tax revenue raised? A $80 million B $160 million C $320 million D $400 million

1 marks

Answer: B

This question in 9708/13 May/June 2012

Q41 · Russia is a significant exporter of wheat 9708/11 Oct/Nov 2012

21 Russia is a significant exporter of wheat. In 2010 there was a poor harvest and the Russian government stopped all exports of wheat to ensure enough supplies for domestic use. Which statement about Russia’s policy is correct? A It is an embargo and will worsen Russia’s balance of trade. B It is a market approach to resource allocation to prevent price rises in Russia. C It is a quota and will improve the importing country’s balance of payments. D It is a tariff and will increase the price of wheat.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2012

Q42 · Why might a government decide to reduce tariffs on agricultural imports? 9708/12 Oct/Nov 2012

19 Why might a government decide to reduce tariffs on agricultural imports? A to develop greater specialisation B to increase government revenue C to promote job creation in rural areas D to protect small businesses

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2012

Q43 · A government believes that it can reduce its trade deficit by the introduction of a tax… 9708/12 Oct/Nov 2012

20 A government believes that it can reduce its trade deficit by the introduction of a tax on its main export. When is this likely to be most effective? A when demand for the export is price elastic B when the exporting country is a member of a customs union C when the exporting country is the major world supplier of the product D when the terms of trade of the exporting country are favourable

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2012

Q44 · When is the imposition of a tariff on a good most likely to reduce a trade deficit? 9708/12 Oct/Nov 2012

30 When is the imposition of a tariff on a good most likely to reduce a trade deficit? A when the country has a potential comparative advantage in producing that good B when the country is a member of an economic union C when the elasticity of supply of the good domestically is zero D when the price elasticity of demand for the good is zero

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2012

Q45 · Which statement about the impact of a quota and a tariff is correct? 9708/13 Oct/Nov 2012

21 Which statement about the impact of a quota and a tariff is correct? A A quota benefits the seller of the imports while a tariff raises government revenue. B A quota decreases the quantity of imports while a tariff leaves the quantity of imports unchanged. C A quota leaves import prices unchanged while a tariff raises the price of imports. D A quota shifts the demand curve for imports while a tariff shifts the supply curve of imports.

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2012

Q46 · The diagram shows the effects of introducing an import tariff on wheat in a country 9708/11 May/June 2013

20 The diagram shows the effects of introducing an import tariff on wheat in a country. R domestic supply price of S wheat PT world supply + tariff T U world supply P domestic demand O Q1 Q2 quantity of wheat Which area represents the loss of consumer surplus from the tariff? A PTSR B PTSUP C STU D SUQ2Q1

1 marks

Answer: B

This question in 9708/11 May/June 2013

Q47 · What is a feature of a customs union? 9708/11 May/June 2013

21 What is a feature of a customs union? A the fixing of quotas for its members B the introduction of a common currency C the joint setting of prices D the removal of tariff barriers between its members

1 marks

Answer: D

This question in 9708/11 May/June 2013

Q48 · What is the most likely aim of a government that increases the level of tariffs on… 9708/12 May/June 2013

20 What is the most likely aim of a government that increases the level of tariffs on imported manufactured goods? A a fall in interest rates B a fall in the exchange rate C a rise in domestic employment D a rise in the general price level

1 marks

Answer: C

This question in 9708/12 May/June 2013

Q49 · What is a characteristic of a customs union but is not of a free trade area? 9708/12 May/June 2013

21 What is a characteristic of a customs union but is not of a free trade area? A abolition of import quotas B abolition of tariffs between member countries C a common currency D a common external tariff

1 marks

Answer: D

This question in 9708/12 May/June 2013

Q50 · What would be least likely to restrict international trade? 9708/13 May/June 2013

20 What would be least likely to restrict international trade? A increasing shipping charges B more complex customs procedures C rising levels of global income D rising unemployment in developed countries

1 marks

Answer: C

This question in 9708/13 May/June 2013

Q51 · The diagram shows a market for a good which is supplied partly from domestic production… 9708/11 Oct/Nov 2013

11 The diagram shows a market for a good which is supplied partly from domestic production and partly from imports. Sh shows domestic supply and Sw shows world supply. Domestic supply then shifts to Sh1. Sh Sh1 price Sw D O R T U V quantity What will be the level of consumption and the associated volume of imports after the supply shift? consumption volume of imports A OU TU B OU UV C OV TV D OV UV

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2013

Q52 · The diagram shows a country’s domestic supply of, and demand for, a commodity that it… 9708/12 Oct/Nov 2013

10 The diagram shows a country’s domestic supply of, and demand for, a commodity that it both consumes and exports. S WP2 WP1 price D O W Y X Z quantity The world price changes from WP1 to WP2. What are the resulting changes in domestic consumption and exports? domestic consumption quantity of exports A OX to OZ OY to OX B OX to OZ OY to OZ C OY to OW YX to WZ D OY to OW YX to OZ

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2013

Q53 · Which two groups within a country are likely to benefit from the introduction of tariffs? 9708/13 Oct/Nov 2013

19 Which two groups within a country are likely to benefit from the introduction of tariffs? A consumers and shareholders B declining industries and importers C exporters and monopolies D growing industries and the government

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2013

Q54 · A country is a major producer of cotton 9708/11 May/June 2014

21 A country is a major producer of cotton. Its government imposes a tax on exports of its cotton. What effect will this have on the price of cotton in the domestic and world markets? domestic price world price A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: B

This question in 9708/11 May/June 2014

Q55 · A country produces washing machines 9708/12 May/June 2014

20 A country produces washing machines. The government lowered both the tax on washing machines produced in its country and the quota on imports of foreign washing machines. What is the likely result? A Government revenue increased. B Home production decreased. C Prices of foreign washing machines fell. D The balance of trade in goods improved.

1 marks

Answer: D

This question in 9708/12 May/June 2014

Q56 · The diagram shows the effect on the quantity of an import to the domestic market of the… 9708/12 May/June 2014

21 The diagram shows the effect on the quantity of an import to the domestic market of the removal of a tariff that reduces the import’s price to P1. S (domestic) P S (world with tariff) price P1 S (world no tariff) D (domestic) O 15 30 40 48 quantity (000s) By how much will the quantity of imports increase? A 8000 tonnes B 10 000 tonnes C 23 000 tonnes D 33 000 tonnes

1 marks

Answer: C

This question in 9708/12 May/June 2014

Q57 · In their transition to market economies some former command economies have adopted a… 9708/13 May/June 2014

2 In their transition to market economies some former command economies have adopted a gradual approach. This has meant continuing with some of the features of their command system. What is not a valid, short-run reason for continuing with the feature shown? feature reason for continuation A inconvertible currency to attract foreign direct investment B price controls on foodstuffs to protect the real value of workers’ incomes C state ownership of banks to avoid large-scale bankruptcies D tariffs on imported manufactures to allow comparative advantage to develop

1 marks

Answer: A

This question in 9708/13 May/June 2014

Q58 · What would not be a reason for a government to impose a quota on imports? 9708/13 May/June 2014

21 What would not be a reason for a government to impose a quota on imports? A to prevent dumping B to raise tax revenue C to reduce a balance of trade deficit D to support an important industry

1 marks

Answer: B

This question in 9708/13 May/June 2014

Q59 · The European Union imposes a quota on the volume of garments imported from China 9708/13 May/June 2014

22 The European Union imposes a quota on the volume of garments imported from China. What is likely to be the effect on the prices received by Chinese garment producers and on the prices paid by the consumers of Chinese garments in Europe and the United States (US)? prices received prices paid by prices paid by by Chinese European US consumers producers consumers A decrease decrease decrease B decrease increase increase C increase decrease increase D increase increase decrease

1 marks

Answer: D

This question in 9708/13 May/June 2014

Q60 · The diagram shows the effect of removing a tariff on imports of sugar into a country 9708/11 Oct/Nov 2014

20 The diagram shows the effect of removing a tariff on imports of sugar into a country. domestic supply price of sugar T Y PT world supply + tariff U V W X P world supply domestic demand O Q1 Q2 Q3 Q4 quantity of sugar Which area represents the loss of producer surplus for domestic producers of sugar in the country? A PTTUP B PTTVP C PTYXP D TYWV

1 marks

This question in 9708/11 Oct/Nov 2014

Q61 · The diagram shows the demand for and supply of a foreign-made mobile (cell) phone 9708/12 Oct/Nov 2014

17 The diagram shows the demand for and supply of a foreign-made mobile (cell) phone. The initial position in the domestic market is X. S E S1 F price G X D1 D O quantity Importers increased the supply of the phone and there was an increase in demand for the phone. The government considered whether to protect domestic manufacturers with a limit on imports which would keep the supply at the initial quantity. How would the price change between the new equilibrium without a limit on imports and the equilibrium with a limit on imports? A a movement from E to F B a movement from F to G C a movement from G to E D a movement from G to F

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2014

Q62 · What is meant by dumping in international trade? 9708/12 Oct/Nov 2014

20 What is meant by dumping in international trade? A selling products in a foreign market at a price below cost B selling products in a foreign market at a price below that of other firms C selling products in a foreign market that are of a lower quality than those of domestic firms D selling products in a foreign market that are of a lower quality than those of other foreign firms

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2014

Q63 · As a result of a trade agreement, toys produced in Africa can be supplied to European… 9708/12 Oct/Nov 2014

21 As a result of a trade agreement, toys produced in Africa can be supplied to European markets. These toys are much cheaper than similar toys produced in Europe but are not of such good quality. What will happen in Europe to expenditure on toys, employment in European toy companies and imports from Africa? expenditure employment imports A decrease decrease decrease B increase decrease uncertain C increase uncertain increase D uncertain uncertain increase

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2014

Q64 · To reduce a deficit on the current account of the balance of payments, a government… 9708/12 Oct/Nov 2014

30 To reduce a deficit on the current account of the balance of payments, a government imposes a limit on the foreign exchange its people and firms can purchase. Why may this increase the country’s inflation rate? A Firms may have to purchase more expensive, domestically-produced raw materials. B Firms may have to sell more of their output on the domestic market. C The change in demand for foreign currency on the foreign exchange market may lead to an appreciation in the exchange rate. D The change in supply of the domestic currency on the foreign exchange market may reduce the money supply in the domestic economy.

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2014

Q65 · What is not usually a motive for a country to use protection in international trade? 9708/13 Oct/Nov 2014

20 What is not usually a motive for a country to use protection in international trade? A to increase global economic welfare B to prevent the dumping of products by another country C to prevent unemployment within the country D to shelter an infant industry within the country

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2014

Q66 · A government decides to increase a quota on an imported good 9708/13 Oct/Nov 2014

21 A government decides to increase a quota on an imported good. What is likely to happen? A The demand for the good will fall. B The good will become more expensive. C The government’s revenue will decline. D There will be more of the good imported.

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2014

Q67 · In the diagram, D is a country’s demand curve for an imported good 9708/11 May/June 2015

20 In the diagram, D is a country’s demand curve for an imported good. The country’s government imposes an import tariff equal to PWPC on the good. PC price x y PW z D O quantity Which areas measure the resulting loss in consumer surplus and the resulting gain in government revenue? loss in gain in consumer government surplus revenue A x + y x B x + y z C y x D y z

1 marks

Answer: A

This question in 9708/11 May/June 2015

Q68 · How might trade protection reduce a country’s ability to compete in export markets? 9708/12 May/June 2015

20 How might trade protection reduce a country’s ability to compete in export markets? A by increasing firms’ profit margins on goods supplied to the domestic market B by increasing the cost to the country’s manufacturers of imported components C by increasing the real disposable income of the country’s consumers D by making the country more attractive to inward investors

1 marks

Answer: B

This question in 9708/12 May/June 2015

Q69 · What is found in an economic union but not in a customs union? 9708/12 May/June 2015

21 What is found in an economic union but not in a customs union? A a common external tariff on trade with non-member countries B an absence of quotas on trade between member countries C an absence of tariffs on trade between member countries D free movement of labour and capital between member countries

1 marks

Answer: D

This question in 9708/12 May/June 2015

Q70 · What will rise as a consequence of removing a tariff? 9708/13 May/June 2015

20 What will rise as a consequence of removing a tariff? A domestic consumer surplus B domestic price C domestic producer surplus D government revenue

1 marks

Answer: A

This question in 9708/13 May/June 2015

Q71 · A group of people in a country start a campaign for free trade because they believe that… 9708/11 Oct/Nov 2015

20 A group of people in a country start a campaign for free trade because they believe that it will benefit the economy. Which argument in favour of free trade is not likely to appear in their campaign? A It encourages competition between producers in different countries. B It encourages global specialisation and better product quality. C It gives consumers a greater choice of products from other countries. D It lets countries dump cheap surplus products in other countries.

1 marks

Answer: D

This question in 9708/11 Oct/Nov 2015

Q72 · A particular good in the Barbados market could be supplied by domestic producers, or… 9708/12 Oct/Nov 2015

21 A particular good in the Barbados market could be supplied by domestic producers, or producers in Trinidad & Tobago, or producers in the USA, at the prices shown in US dollars. origin of production price Barbados $1.00 Trinidad & Tobago $0.85 USA $0.75 Originally, Barbados had a 20% ad valorem duty on imports from Trinidad & Tobago and the USA. Barbados then formed a customs union with Trinidad & Tobago, with a common external tariff, also of 20%. From which countries would Barbados import the good, before the formation of the customs union and after the formation of the customs union? before after A neither Trinidad & Tobago B neither USA C USA Trinidad & Tobago D USA USA

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2015

Q73 · The supply of an imported good is shown by curve S 9708/13 Oct/Nov 2015

21 The supply of an imported good is shown by curve S. What will be the new supply curve if an ad valorem (percentage) tariff is imposed on the good? A B S C price D O quantity

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2015

Q74 · Trade relations between two countries have gone through four stages 9708/13 Oct/Nov 2015

22 Trade relations between two countries have gone through four stages. At which stage was a customs union established? A The countries removed tariffs on selected goods from each other. B The countries removed tariffs on all goods from each other. C The countries set up a common external tariff towards other countries. D The countries introduced a single currency for use by both countries.

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2015

Q75 · A government removes the tariff on a product as shown in the diagram 9708/12 Feb/March 2016

27 A government removes the tariff on a product as shown in the diagram. D domestic supply P price P1 world supply with tariff P2 world supply without tariff S domestic demand O V W X Y Z quantity What will be the change in domestic production? A a reduction of W V B a reduction of XV C a reduction of XW D a reduction of ZY

1 marks

Answer: A

This question in 9708/12 Feb/March 2016

Q76 · What is the main argument a government of a small country might use in times of a… 9708/11 May/June 2016

27 What is the main argument a government of a small country might use in times of a worsening worldwide recession to justify an increase in import tariffs and other trade protectionist policies? A to protect the country from a rise in domestic unemployment B to protect the country’s terms of trade C to protect the domestic economy from increasing prices D to protect the domestic economy from the import of poor quality goods

1 marks

Answer: A

This question in 9708/11 May/June 2016

Q77 · What is not associated with greater economic integration between countries? 9708/12 May/June 2016

26 What is not associated with greater economic integration between countries? A increased financial flows B increased quotas C increased trade creation D increased trade diversion

1 marks

Answer: B

This question in 9708/12 May/June 2016

Q78 · Which statement is not a valid justification for an import tariff? 9708/12 May/June 2016

27 Which statement is not a valid justification for an import tariff? A A tariff will prevent imported inflation. B A tariff will prevent unfair foreign competition. C A tariff will protect a developing industry. D A tariff will protect an industry in decline.

1 marks

Answer: A

This question in 9708/12 May/June 2016

Q79 · The diagram shows a market for a good which is supplied partly from domestic production… 9708/13 May/June 2016

12 The diagram shows a market for a good which is supplied partly from domestic production and partly from imports. Sh1 shows domestic supply and Sw shows world supply. Domestic supply then shifts to Sh2. Sh1 Sh2 price Sw D O R T U V quantity What will be the level of consumption and the associated volume of imports after the supply shift? volume consumption of imports A OU TU B OU UV C OV TV D OV UV

1 marks

Answer: C

This question in 9708/13 May/June 2016

Q80 · Why might a government decide to increase the quota set on imports? 9708/13 May/June 2016

27 Why might a government decide to increase the quota set on imports? A to cut a deficit on the trade balance in goods and services B to encourage diversification in home industry C to lower domestic unemployment D to raise the level of international trade

1 marks

Answer: D

This question in 9708/13 May/June 2016

Q81 · The diagram shows the market for coffee in a small coffee-producing country 9708/11 Oct/Nov 2016

11 The diagram shows the market for coffee in a small coffee-producing country. The domestic supply of coffee is represented by Sd. The supply curve of imports was initially Sm1. A bad harvest that affects only other coffee-producing countries shifts the supply curve of imports to Sm2. Sd Sm2 price Sm1 D O T V W quantity How will consumption and imports be affected by the supply change? A Consumption falls by VW and imports fall to OT. B Consumption falls by VW and imports fall to zero. C Consumption is unchanged and imports fall to OT. D Consumption is unchanged and imports fall to zero.

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2016

Q82 · A government wants to use trade protection both to improve its trade performance and to… 9708/12 Oct/Nov 2016

27 A government wants to use trade protection both to improve its trade performance and to raise government revenue. Which policy will help it to achieve this? A raising quotas on imported goods B raising subsidies on exported goods C raising tariffs on exported goods D raising tariffs on imported goods

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2016

Q83 · An economy with a long history of extensive barriers to trade decides to switch to… 9708/13 Oct/Nov 2016

27 An economy with a long history of extensive barriers to trade decides to switch to totally free trade. What is most likely to increase in the short term? A consumer surplus B government revenue C inflationary pressure D profits of all domestic companies

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2016

Q84 · The US President signed a trade agreement which allowed more duty-free access to the US… 9708/12 Feb/March 2017

26 The US President signed a trade agreement which allowed more duty-free access to the US market for Latin American and Caribbean countries. Who might benefit in the short run from this agreement? A Caribbean countries, because they may export to Latin America. B Latin American businesses, because they may be able to sell more in the US. C Latin American governments, because they will not have to pay so much duty. D The US, because it may export more to Latin America.

1 marks

Answer: B

This question in 9708/12 Feb/March 2017

Q85 · Which statement is not a valid reason why a country may impose protectionist measures? 9708/12 Feb/March 2017

27 Which statement is not a valid reason why a country may impose protectionist measures? A to allow a newly developed domestic industry to grow to a viable size B to enable a country to retain control of an industry it regards as being of strategic importance C to give consumers a wider choice of goods and services D to give time for workers in a declining domestic industry to find alternative employment

1 marks

Answer: C

This question in 9708/12 Feb/March 2017

Q86 · Four countries, A, B, C and D, trade internationally 9708/11 May/June 2017

26 Four countries, A, B, C and D, trade internationally. Each circle in the diagram represents a free trade area between the countries within the circle. A country can belong to more than one free trade area. Countries outside of a circle face trade barriers. Which country has the greatest opportunity to benefit from free international trade? A C B D

1 marks

Answer: B

This question in 9708/11 May/June 2017

Q87 · A small trading country decides on a policy of import substitution by producing for itself 9708/11 May/June 2017

27 A small trading country decides on a policy of import substitution by producing for itself. What is the most likely reason for this policy? A to follow the principle of absolute advantage B to influence world prices in international markets C to protect local industries from foreign competition D to substitute imported machines for local labour

1 marks

Answer: C

This question in 9708/11 May/June 2017

Q88 · Which government policy could be considered as a protectionist policy? 9708/12 May/June 2017

27 Which government policy could be considered as a protectionist policy? A an imposition of controls on capital outflows from the economy B foreign exchange intervention to prevent a devaluation of the country’s currency C pollution charges imposed on domestic producers D subsidies paid to domestic producers of a tradeable good

1 marks

Answer: D

This question in 9708/12 May/June 2017

Q89 · The diagram shows that the imposition of a tariff raises a good’s world price from $10 to… 9708/13 May/June 2017

26 The diagram shows that the imposition of a tariff raises a good’s world price from $10 to $14. domestic supply price D $ 14 10 domestic demand S 0 20 30 70 100 quantity (millions) What was the effect on total expenditure on the good? A It fell by $20 million B It fell by $160 million C It rose by $220 million D It rose by $560 million

1 marks

Answer: A

This question in 9708/13 May/June 2017

Q90 · Which government measure would reduce protectionism? 9708/13 May/June 2017

27 Which government measure would reduce protectionism? A an increase in product safety standards B an increase in subsidies to domestic firms C an increase in the level of import quotas D an increase in the rate of import duties

1 marks

Answer: C

This question in 9708/13 May/June 2017

Q91 · What is not an example of protectionism? 9708/11 Oct/Nov 2017

27 What is not an example of protectionism? A a ban on the imports of chicken products B import tariffs on agricultural products C maximum supermarket food prices D strict health and safety requirements

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2017

Q92 · Country X forms a customs union with country Y 9708/12 Oct/Nov 2017

25 Country X forms a customs union with country Y. X then ceases to produce its own cars and instead imports cars from Y. Country Y diverts some of its car exports to X from country Z. How is this likely to affect car prices in X and Z? country X country Z A decrease decrease B decrease increase C increase decrease D increase increase

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2017

Q93 · In 2014, Poland was the world’s largest exporter of apples 9708/12 Oct/Nov 2017

27 In 2014, Poland was the world’s largest exporter of apples. 55% of the crop went to Russia. Then Russia banned the imports. What would not have prevented the revenue of the Polish apple farmers falling dramatically? A The apple farmers found new markets in other countries. B The apple farmers were able to store the harvest for sale later. C The Polish Government placed a ban on imports of food from Russia. D The Polish Government established a scheme to buy apples and supply them to charities.

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2017

Q94 · The diagram shows that the imposition of a tariff raises a product’s world price from $10… 9708/13 Oct/Nov 2017

26 The diagram shows that the imposition of a tariff raises a product’s world price from $10 to $14. domestic supply price D $ 14 10 domestic demand S 0 20 30 70 100 quantity (millions) What was the change in domestic producers’ income as a result of the tariff? A It rose by $120 million. B It rose by $160 million. C It rose by $220 million. D It rose by $280 million.

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2017

Q95 · What is a disadvantage when a quota replaces a tariff to reduce imports? 9708/13 Oct/Nov 2017

27 What is a disadvantage when a quota replaces a tariff to reduce imports? A It is harder to anticipate its impact. B It is less effective at raising revenue for the government. C It is less effective when imports are necessities. D It prevents any involvement of market forces.

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2017

Q96 · What is present in a customs union but not in a free trade area? 9708/12 Feb/March 2018

26 What is present in a customs union but not in a free trade area? A a common external tariff with the rest of the world B a common monetary system C a common system of taxation D the free movement of all goods, services and factors of production

1 marks

Answer: A

This question in 9708/12 Feb/March 2018

Q97 · Which argument in favour of protectionism is not generally regarded as economically valid? 9708/12 Feb/March 2018

27 Which argument in favour of protectionism is not generally regarded as economically valid? A It increases the standard of living of the population in general. B It prevents heavily-subsidised imports from competing unfairly against domestic goods. C It provides time for the protected industry’s workers to be retrained for other work. D Once the protected industry becomes established, it will produce efficiently.

1 marks

Answer: A

This question in 9708/12 Feb/March 2018

Q98 · In the diagram, D is a country’s demand curve for an imported good 9708/11 May/June 2018

26 In the diagram, D is a country’s demand curve for an imported good. The country’s government imposes an import tariff equal to PWPC on the good. price PC x y PW z D O quantity Which areas measure the resulting loss in consumer surplus and the resulting gain in government revenue? loss in gain in consumer government surplus revenue A x + y x B x + y z C y x D y z

1 marks

Answer: A

This question in 9708/11 May/June 2018

Q99 · Which policy is not likely to help reduce a balance of payments deficit? 9708/11 May/June 2018

29 Which policy is not likely to help reduce a balance of payments deficit? A an increase in expenditure promoting locally produced goods B an increase in the quota on cheap imports C an increase in the restrictions on foreign exchange D an increase in the subsidies to exporting industries

1 marks

Answer: B

This question in 9708/11 May/June 2018

Q100 · In the diagram, D and S represent the domestic demand and supply curves for a product 9708/12 May/June 2018

13 In the diagram, D and S represent the domestic demand and supply curves for a product. Sw represents world supply of the product at a world price of Pw. The initial domestic market equilibrium of the product is at E1. If foreign trade were to be banned completely, the domestic market equilibrium would be at E2. X S price E2 Y E1 Pw Sw Z D O Q1 quantity of products What would be the loss of consumer surplus if all foreign trade were banned? A PwXE1 B PwYE2E1 C YXE2 D ZYE2

1 marks

Answer: B

This question in 9708/12 May/June 2018

Q101 · What is the difference between a customs union and a free trade area? 9708/12 May/June 2018

26 What is the difference between a customs union and a free trade area? A Only the customs union has a common external tariff with the rest of the world. B Only the customs union requires fixed exchange rates between member countries. C Only the free trade area needs to eliminate tariffs between member countries. D Only the free trade area requires freedom of movement for labour and capital between member countries.

1 marks

Answer: A

This question in 9708/12 May/June 2018

Q102 · Which statement about trade protection is correct? 9708/12 May/June 2018

27 Which statement about trade protection is correct? A A tariff will result in a greater decrease in demand for an import the lower its price elasticity of demand is. B Embargoes are only an effective trade barrier against imports in price-elastic demand. C Export subsidies to domestic firms will prevent the dumping of foreign products in the domestic market. D Quotas are less effective than tariffs for raising government revenue.

1 marks

Answer: D

This question in 9708/12 May/June 2018

Q103 · A particular good in the Barbados market could be supplied by domestic producers, or… 9708/13 May/June 2018

25 A particular good in the Barbados market could be supplied by domestic producers, or producers in Trinidad and Tobago, or producers in the United States (US), at the prices shown in US dollars. origin of production price Barbados $1.00 Trinidad and Tobago $0.85 US $0.75 Originally, Barbados had a 20% ad valorem duty on imports from Trinidad and Tobago and the US. Barbados then formed a customs union with Trinidad and Tobago, with a common external tariff, also of 20%. From which countries would Barbados import the good, before the formation of the customs union and after the formation of the customs union? before after A neither Trinidad and Tobago B neither US C US Trinidad and Tobago D US US

1 marks

Answer: C

This question in 9708/13 May/June 2018

Q104 · What would reduce an economy’s protection against the import of cars? 9708/13 May/June 2018

26 What would reduce an economy’s protection against the import of cars? A a higher quota of imported cars B a higher subsidy for domestic car producers C a higher tariff on imported cars D a lower exchange rate

1 marks

Answer: A

This question in 9708/13 May/June 2018

Q105 · If an economy experiences a persistent balance of trade deficit, it may choose to place… 9708/13 May/June 2018

29 If an economy experiences a persistent balance of trade deficit, it may choose to place tariffs on imports of manufactured goods. When might the use of tariffs solve a balance of trade deficit in the long term? A when an economy imports a sustainable amount of raw materials B when an economy is experiencing a high rate of inflation C when the demand for imports is inelastic D when the supply of domestically produced goods is elastic

1 marks

Answer: D

This question in 9708/13 May/June 2018

Q106 · Which action increases and which action decreases the level of protectionism? 9708/11 Oct/Nov 2018

26 Which action increases and which action decreases the level of protectionism? increases protectionism decreases protectionism A imposing an embargo reducing subsidies to domestic producers B imposing exchange controls lowering quota levels C introducing voluntary increasing subsidies to export agreements domestic producers D removing quotas introducing embargos

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2018

Q107 · Country M imposes a tariff on imports of steel 9708/11 Oct/Nov 2018

27 Country M imposes a tariff on imports of steel. Which price elasticity values will result in the smallest reduction in steel imports into M? price elasticity of price elasticity of supply of domestic demand for steel in steel producers in country M country M A 0.2 0.4 B 1.0 0.8 C 1.5 1.0 D 2.0 1.2

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2018

Q108 · The diagram shows the domestic and world demand and supply for a good 9708/12 Oct/Nov 2018

27 The diagram shows the domestic and world demand and supply for a good. S (domestic) price P3 P2 world supply + tariff P1 world supply D (domestic) O Q1 Q2 Q3 Q4 Q5 quantity The government imposes a tariff on imports of the good. What will happen to the quantity imported? A It will fall from Q1Q3 to Q2Q3. B It will fall from Q1Q5 to Q2Q4. C It will fall from Q2Q5 to Q3Q4. D It will fall from OQ5 to OQ4.

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2018

Q109 · What is a characteristic of a customs union but not of a free trade area? 9708/13 Oct/Nov 2018

26 What is a characteristic of a customs union but not of a free trade area? A a common external tariff B a common tariff between member countries C fixed exchange rates between member countries D the abolition of all tariffs between member countries

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2018

Q110 · In the diagram, Dd and Sd represent the domestic demand and supply curves for a product 9708/13 Oct/Nov 2018

27 In the diagram, Dd and Sd represent the domestic demand and supply curves for a product. Sw represents world supply of the product when there is free trade, at a world price of Pw. The initial domestic market equilibrium level of consumption of the product is at E. If a tariff of t were to be imposed, world supply would now be represented by Sw + tariff, at a price of Pw + t. X Sd price K J Pw + t Sw + tariff Pw Sw L M N E Dd O Q1 Q2 Q3 Q4 quantity of product What would be the level of domestic production and the total of government revenue from tariffs after the tariff of t were imposed? level of total level of domestic production revenue from tariffs A OQ2 JKMN B OQ2 OQ2MPw C Q1Q2 EJKL D Q2Q3 KLM + JNE

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2018

Q111 · In the diagram Sd is the domestic supply of a product, Sw is the world supply and Dd is… 9708/12 Feb/March 2019

20 In the diagram Sd is the domestic supply of a product, Sw is the world supply and Dd is the domestic demand for the product. Sd price ($) 20 10 Sw Dd 0 0 4 8 13 quantity (m) After operating a free trade system the country bans all imports. What will be the effect on the revenue of domestic producers and world producers of the ban? domestic producers world producers $m $m A gain 120 lose 50 B gain 120 lose 90 C gain 160 lose 50 D gain 160 lose 90

1 marks

Answer: B

This question in 9708/12 Feb/March 2019

Q112 · Two countries trade with one another without any forms of protection 9708/12 Feb/March 2019

24 Two countries trade with one another without any forms of protection. They also impose a common external tariff on the imports from all other countries. What have these two countries formed? A a customs union B a free trade area C a monetary union D an economic union

1 marks

Answer: A

This question in 9708/12 Feb/March 2019

Q113 · Which type of import control allows a country to develop a potential comparative… 9708/12 Feb/March 2019

26 Which type of import control allows a country to develop a potential comparative advantage in a particular good? A a quota that protects jobs in a depressed region B a short-term tariff that protects an infant industry C a tariff that improves an industry’s terms of trade D an embargo on goods with negative externalities

1 marks

Answer: B

This question in 9708/12 Feb/March 2019

Q114 · The tariff on Indian goods entering the US falls from 10% to 5% 9708/11 May/June 2019

5 The tariff on Indian goods entering the US falls from 10% to 5%. What will be the most likely effect on the producer and consumer surplus in the US? US producer US consumer surplus surplus A decrease increase B decrease no change C increase increase D increase no change

1 marks

Answer: A

This question in 9708/11 May/June 2019

Q115 · Industrialised countries X and Y trade with each other 9708/11 May/June 2019

23 Industrialised countries X and Y trade with each other. Country X imposes a general tariff of 20% on imports from country Y. In which circumstances would the imposition of the tariff be unfavourable to country X? A if country X is seeking to protect its infant industries B if country X lacks the capacity to produce import substitutes C if imports from country Y have been dumped in country X D if imports of manufactured goods from country Y are price elastic

1 marks

Answer: B

This question in 9708/11 May/June 2019

Q116 · The diagram shows the imposition of an import tariff 9708/12 May/June 2019

24 The diagram shows the imposition of an import tariff. SW is world supply. SW + tax is world supply after the tariff is imposed. Sdomestic price SW + tax SW D O q1 q2 q3 q4 quantity Which statement is not correct? A Domestic demand will fall from q4 to q3. B Imports will change from q1q4 to q2q3. C Imports will fall from q4 to q3. D Supply of domestic goods will increase from q1 to q2.

1 marks

Answer: C

This question in 9708/12 May/June 2019

Q117 · The diagram shows the effect of introducing an import quota on the market for good X 9708/13 May/June 2019

23 The diagram shows the effect of introducing an import quota on the market for good X. Sdomestic Sdomestic + quota price of X pQ p Sworld Ddomestic O q1 q2 q3 q4 quantity of X What is the change in domestic supply and the size of the import quota? change in size of domestic supply import quota A q1q2 q2q3 B q1q3 q1q4 C q1q4 q1q2 D q2q3 q3q4

1 marks

Answer: A

This question in 9708/13 May/June 2019

Q118 · Country X joins a customs union with country Y and will remove the tariff on its imports… 9708/13 May/June 2019

24 Country X joins a customs union with country Y and will remove the tariff on its imports of good M from country Y. Under which conditions will trade creation in country X be the smallest? existing size of price elasticity country X’s tariff on of demand for imports of good M good M in country X A large –0.8 B large –1.4 C small –0.8 D small –1.4

1 marks

Answer: C

This question in 9708/13 May/June 2019

Q119 · When will the imposition of a tariff by a country on the goods and services of its major… 9708/11 Oct/Nov 2019

19 When will the imposition of a tariff by a country on the goods and services of its major trading partners reduce the country’s expenditure on imports? A when the income elasticity of demand for imports is greater than 1 B when the price elasticity of demand for imports is greater than 1 C when the price elasticity of demand for imports is less than 1 D when the price elasticity of supply of imports is greater than 1

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2019

Q120 · What is not an example of protectionism? 9708/12 Oct/Nov 2019

21 What is not an example of protectionism? A the European Union (EU) requiring goods imported into member states to meet safety standards B the Pakistan government increasing the rate of goods and services tax, GST, on some exported goods from 2% to 5% C the Nigeria government banning the import of packaged sugar D the US imposing a 35% tariff on tyres imported from China

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2019

Q121 · The diagram shows the effect of a tariff on a product 9708/13 Oct/Nov 2019

22 The diagram shows the effect of a tariff on a product. price domestic supply P2 world supply plus tariff P1 world supply domestic demand O quantity From this diagram, what determines the gain the tariff generates for domestic producers? A the price elasticities of domestic supply and demand B the tariff rate and the price elasticities of both domestic demand and supply C the tariff rate and the price elasticity of domestic demand D the tariff rate and the price elasticity of domestic supply

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2019

Q122 · The European Union consists of a group of countries with free trade between its members… 9708/13 Oct/Nov 2019

23 The European Union consists of a group of countries with free trade between its members and a common external tariff on trade with non-members. What would weaken the operation of this customs union? A devaluation of any member’s currency B differences in wage costs between members C entry tests for seasonal migrant workers D one member country agreeing a trade deal with a non-member country

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2019

Q123 · What is not an example of protectionism? 9708/11 May/June 2020

24 What is not an example of protectionism? A export subsidies B import subsidies C quotas D tariffs

1 marks

Answer: B

This question in 9708/11 May/June 2020

Q124 · Which measure would not be part of a government subsidy to protect domestic producers… 9708/12 May/June 2020

17 Which measure would not be part of a government subsidy to protect domestic producers from competition? A import quotas B interest-free loans provided by the government C reductions in profits (business) taxes D transfer payments

1 marks

Answer: A

This question in 9708/12 May/June 2020

Q125 · In 2018 the United States (US) government introduced tariffs on a wide range of imports… 9708/12 May/June 2020

29 In 2018 the United States (US) government introduced tariffs on a wide range of imports from China. Which type of policy was the US government adopting? A expenditure-reducing B expenditure-switching C monetary D supply-side

1 marks

Answer: B

This question in 9708/12 May/June 2020

Q126 · The diagram shows the imposition of a tariff on imports 9708/11 Oct/Nov 2020

25 The diagram shows the imposition of a tariff on imports. domestic supply price U T world supply after tariff P2 P1 world supply before tariff P Q R S domestic demand O Q1 Q2 Q3 Q4 output Which set of values is correct? imports imports tax revenue before tariff after tariff A OQ4 OQ3 PUTS B OQ4 OQ3 QUTR C Q1Q4 Q2Q3 PUTS D Q1Q4 Q2Q3 QUTR

1 marks

Answer: D

This question in 9708/11 Oct/Nov 2020

Q127 · In which economic context is the term ‘protectionism’ usually applied? 9708/12 Oct/Nov 2020

20 In which economic context is the term ‘protectionism’ usually applied? A the protection of consumers against excessive prices B the protection of employees against exploitation by multinational companies C the protection of local producers against foreign competitors D the protection of the foreign exchange rate against currency speculators

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2020

Q128 · The diagram shows the effect of removing a tariff on imports of good X into country Y 9708/12 Feb/March 2021

24 The diagram shows the effect of removing a tariff on imports of good X into country Y. SX domestic price of X (US$) 20 SX world + tariff 10 SX world DX domestic 0 8 10 17 20 quantity of X (millions) What is the volume, in million units, of the extra international trade created by removing the tariff? A 3 B 5 C 10 D 12

1 marks

Answer: B

This question in 9708/12 Feb/March 2021

Q129 · As part of its trade policy, a government subsidises the cost of machinery used to… 9708/12 May/June 2021

21 As part of its trade policy, a government subsidises the cost of machinery used to manufacture goods for export. How will this affect the balance of payments? A decrease the deficit on the capital account B decrease the deficit on the current account C increase the deficit on the capital account D increase the deficit on the current account

1 marks

Answer: B

This question in 9708/12 May/June 2021

Q130 · The diagram shows the effect of the introduction of a tariff on good X by country Y 9708/12 May/June 2021

25 The diagram shows the effect of the introduction of a tariff on good X by country Y. SX domestic price of X (US$) 20 SX world + tariff 10 SX world DX domestic 0 80 100 170 200 quantity of X (millions) What is the revenue, in US$ million, received by producers of good X in country Y after the tariff is introduced? A 400 B 800 C 1000 D 2000

1 marks

Answer: D

This question in 9708/12 May/June 2021

Q131 · What is not an aim of protectionism? 9708/13 May/June 2021

20 What is not an aim of protectionism? A to improve balance of trade B to increase price of exports C to protect infant industries D to reduce the volume of imports

1 marks

Answer: B

This question in 9708/13 May/June 2021

Q132 · The world trade price of cars in country Y is US$10 000 9708/13 May/June 2021

24 The world trade price of cars in country Y is US$10 000. At this price domestic car producers supply 100 000 cars to the market and domestic consumers purchase 200 000 cars. The government of country Y imposes a 10% tariff on imported cars. Under which conditions will this tariff raise the most revenue for the government? price elasticity price elasticity of of supply of car demand for cars producers in in country Y country Y A +0.5 –0.5 B +0.5 –1.5 C +1.5 –0.5 D +1.5 –1.5

1 marks

Answer: A

This question in 9708/13 May/June 2021

Q133 · Which statement about trade protection is correct? 9708/13 May/June 2021

26 Which statement about trade protection is correct? A A tariff results in a greater decrease in demand for an import the lower is its price elasticity of demand. B Embargoes are only an effective trade barrier when the demand for imports is price-elastic. C Export subsidies to domestic firms will prevent the dumping of foreign products in the domestic market. D Quotas are less effective than tariffs for raising government revenue.

1 marks

Answer: D

This question in 9708/13 May/June 2021

Q134 · Which argument for protection would be most relevant if the government of country X… 9708/12 Oct/Nov 2021

22 Which argument for protection would be most relevant if the government of country X decided to exercise voluntary export restraint in its trade with country Y? A Voluntary export restraint would achieve an immediate correction for X’s balance of trade deficit. B Voluntary export restraint would cause the level of GDP to increase in country X. C Voluntary export restraint would help to negotiate improved trading conditions between X and Y. D Voluntary export restraint would help to reduce the level of unemployment in country X.

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2021

Q135 · The diagram shows the effect of the United States (US) imposing a tariff on the import of… 9708/12 Oct/Nov 2021

27 The diagram shows the effect of the United States (US) imposing a tariff on the import of steel in 2018. Z domestic supply of steel price of steel T Y P1 world supply of steel plus tariff U V W X P world supply of steel domestic demand for steel O Q1 Q2 Q3 Q4 quantity of steel Which statement about the impact of the tariff is correct? A Consumer surplus falls from P1TO to PUO. B Domestic output increases from OQ1 to OQ3. C Imports fall from Q1Q4 to Q2Q3. D The tax revenue raised on imports is P1YWP.

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2021

Q136 · A government decides to increase a quota on an imported good 9708/13 Oct/Nov 2021

22 A government decides to increase a quota on an imported good. What is likely to happen? A The demand for the good will fall. B The good will become more expensive. C The government’s revenue will decline. D There will be more of the good imported.

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2021

Q137 · Country X places a tariff of 20% on steel products imported from country Y 9708/13 Oct/Nov 2021

24 Country X places a tariff of 20% on steel products imported from country Y. Country Y retaliates with a 20% tariff on computers imported from country X. What is a certain economic consequence of these actions? A The balance of payments of country X and country Y will remain unchanged. B The exchange rate value on which trade between the two countries is based will be maintained. C The profits and employment of domestic firms in both countries will be preserved. D The volume of bilateral trade between country X and country Y will be reduced.

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2021

Q138 · The diagram shows the effects of the imposition of a tariff on an internationally-traded… 9708/13 Oct/Nov 2021

26 The diagram shows the effects of the imposition of a tariff on an internationally-traded good. Sdom is the supply and D the demand in country R. Sw is the world supply curve of the product and Swt is the world supply curve after the imposition of a tariff by country R. Sdom price Swt Sw D O Q1 Q2 Q3 Q4 quantity Which combination describes the effect on domestic supply of and demand for the good in country R after the imposition of the tariff? domestic demand supply A falls falls B falls rises C rises falls D rises rises

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2021

Q139 · Which policy would be likely to increase inflation? 9708/13 Oct/Nov 2021

29 Which policy would be likely to increase inflation? A an increase in income tax B an increase in interest rates C limiting the amount banks can lend D raising the level of import tariffs

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2021

Q140 · A government removes its quota on imported laptops 9708/12 Feb/March 2022

20 A government removes its quota on imported laptops. Assuming a normal demand curve and upward-sloping supply curve for laptops, what are the likely effects on domestic laptop manufacturers? change in price change in income received by domestic received by domestic manufacturers manufacturers A decrease decrease B increase increase C decrease uncertain D increase uncertain

1 marks

Answer: A

This question in 9708/12 Feb/March 2022

Q141 · What is not a form of protectionism? 9708/12 Feb/March 2022

26 What is not a form of protectionism? A embargoes B increase in sales tax (VAT) C subsidies on goods for export D voluntary export restraints

1 marks

Answer: B

This question in 9708/12 Feb/March 2022

Q142 · The diagram shows the change in the supply curve of imports, S–S1 to curve S–S2, after… 9708/11 May/June 2022

21 The diagram shows the change in the supply curve of imports, S–S1 to curve S–S2, after the introduction by the government of a trade protection measure. S2 price of imports S S1 O quantity of imports What is the form of protection? A an ad valorem tariff B an embargo C a quota D a specific tariff

1 marks

Answer: C

This question in 9708/11 May/June 2022

Q143 · Why might a country’s government impose a tax on fuel exports? 9708/11 May/June 2022

23 Why might a country’s government impose a tax on fuel exports? A to encourage domestic refineries to increase production B to improve the country’s trade balance C to reduce fuel prices for domestic consumers D to reduce the government’s budget surplus

1 marks

Answer: C

This question in 9708/11 May/June 2022

Q144 · A small country imposes no tariffs and has a perfectly elastic supply of smartphones from… 9708/12 May/June 2022

25 A small country imposes no tariffs and has a perfectly elastic supply of smartphones from the rest of the world. Which statement is correct after the imposition of a tariff? A The domestic demand for smartphones will rise. B The domestic price of smartphones will rise. C The government will lose tax revenue. D The supply of imports will increase.

1 marks

Answer: B

This question in 9708/12 May/June 2022

Q145 · In a recent year, Japanese car manufacturers agreed to limit exports of cars to the USA 9708/12 May/June 2022

26 In a recent year, Japanese car manufacturers agreed to limit exports of cars to the USA. Which form of protectionism is this? A an embargo B an export subsidy C a quota D voluntary export restraint

1 marks

Answer: D

This question in 9708/12 May/June 2022

Q146 · Which statement correctly describes how an import quota works? 9708/14 May/June 2022

20 Which statement correctly describes how an import quota works? A It is a ban on the import of demerit goods. B It imposes strict product regulations on imports. C It is a unit tax that raises the price of imported goods. D It limits the quantity of certain imported goods.

1 marks

Answer: D

This question in 9708/14 May/June 2022

Q147 · The diagram shows the demand and supply curves for solar panels in the US 9708/11 Oct/Nov 2022

21 The diagram shows the demand and supply curves for solar panels in the US. In 2018, the US put a tariff on imported solar panels. price of solar domestic supply panels Pt world supply and tariff Pe world supply domestic demand O M N X P R quantity of solar panels What is the quantity of imported solar panels after the imposition of the tariff? A MN B MX C NP D XP

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2022

Q148 · Country X joins a customs union with country Y and will remove the tariff on its imports… 9708/12 Oct/Nov 2022

23 Country X joins a customs union with country Y and will remove the tariff on its imports of good M from country Y. Under which conditions will trade creation in country X be the largest? existing size of price elasticity country X’s tariff on of demand for imports of good M good M in country X A large –0.8 B large –1.4 C small –0.8 D small –1.4

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2022

Q149 · The diagram shows the effect of introducing a tariff on a product 9708/12 Oct/Nov 2022

27 The diagram shows the effect of introducing a tariff on a product. price domestic supply P2 world supply plus tariff P1 world supply domestic demand O quantity What determines the producer surplus that the tariff generates for domestic producers? A the price elasticities of domestic supply and demand B the tariff rate and the price elasticities of both domestic demand and supply C the tariff rate and the price elasticity of domestic demand D the tariff rate and the price elasticity of domestic supply

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2022

Q150 · Which government policy is most likely to cause expenditure switching that will benefit a… 9708/12 Oct/Nov 2022

28 Which government policy is most likely to cause expenditure switching that will benefit a country’s current account? A increasing import quotas B increasing income tax allowances C increasing spending on unemployment benefits D increasing subsidies to domestic firms

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2022

Q151 · A government removes the tariff on a product, as shown 9708/13 Oct/Nov 2022

20 A government removes the tariff on a product, as shown. D domestic supply price P P1 world supply with tariff P2 world supply without tariff S domestic demand O V W X Y Z quantity What will be the change in domestic production? A a reduction of W V B a reduction of XV C a reduction of XW D a reduction of ZY

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2022

Q152 · Which measure is aimed directly at promoting international trade? 9708/11 May/June 2023

26 Which measure is aimed directly at promoting international trade? A decreasing existing quotas B increasing interest rates C subsidies paid to export industries D wage subsidy schemes during recessions

1 marks

Answer: C

This question in 9708/11 May/June 2023

Q153 · The diagram shows that the imposition of a tariff raises a product’s world price from $10… 9708/13 May/June 2023

29 The diagram shows that the imposition of a tariff raises a product’s world price from $10 to $14. domestic supply price $ 14 10 domestic demand 0 0 20 30 70 100 quantity (millions) By how much did domestic producers’ income increase as a result of the tariff? A $120 million B $160 million C $220 million D $280 million

1 marks

Answer: C

This question in 9708/13 May/June 2023

Q154 · The diagram shows the market for both domestic and imported computers for an economy 9708/12 Feb/March 2024

29 The diagram shows the market for both domestic and imported computers for an economy. The world price is p1. price Sdom S2 Sdom + imp p2 p1 D O q2 q1 quantity Which government policy would lead to a price of p2? A an embargo on imports B an exchange rate appreciation C a subsidy to domestic producers D a tariff on imports

1 marks

Answer: D

This question in 9708/12 Feb/March 2024

Q155 · What is not an example of protectionism? 9708/11 May/June 2024

25 What is not an example of protectionism? A export subsidies B import subsidies C quotas D tariffs

1 marks

Answer: B

This question in 9708/11 May/June 2024

Q156 · Which policy would not be an argument for the use of import tariffs? 9708/11 May/June 2024

30 Which policy would not be an argument for the use of import tariffs? A They are an effective way of raising revenue. B They improve the balance of payments on a current account. C They improve a nation’s terms of trade in a bilateral agreement. D They may lead to retaliation by trading partners.

1 marks

Answer: D

This question in 9708/11 May/June 2024

Q157 · A government wants to protect its textile industry from imports 9708/12 May/June 2024

25 A government wants to protect its textile industry from imports. Which policy is likely to have the least impact on the import of textiles? A a ban on the import of textiles B a sales tax on all textiles sold in the country C a tariff on the import of textiles D all textiles sold in the country are required to meet minimum quality standards

1 marks

Answer: B

This question in 9708/12 May/June 2024

Q158 · What is an unintended consequence of the US government restricting imports of cheap… 9708/13 May/June 2024

25 What is an unintended consequence of the US government restricting imports of cheap Chinese steel? A US importers of steel pay lower prices for steel. B US manufacturers become less competitive. C US steel makers increase steel production. D US steel workers receive higher incomes.

1 marks

Answer: B

This question in 9708/13 May/June 2024

Q159 · A country imports natural gas for which it has price-inelastic demand 9708/13 May/June 2024

27 A country imports natural gas for which it has price-inelastic demand. What is the effect if that country imposes an import duty on the gas? A Consumers in the importing country will suffer a loss of consumer surplus. B The exporting country will gain export revenue. C The importing country’s primary income will increase. D The price of natural gas will rise in other importing countries.

1 marks

Answer: A

This question in 9708/13 May/June 2024

Q160 · A government decides to place a tariff on imports of raw materials 9708/11 Oct/Nov 2024

29 A government decides to place a tariff on imports of raw materials. Which statement about the impact of the tariff is correct? A It will increase costs of production for domestic firms. B It will increase consumer surplus for domestic consumers. C It will reduce government revenue. D There will be a fall in the price of imports and a rise in the demand.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2024

Q161 · Which policy is most likely to reduce a balance of payments deficit without causing… 9708/12 Oct/Nov 2024

26 Which policy is most likely to reduce a balance of payments deficit without causing inflation? A decreased import quotas B depreciation of currency C higher interest rates D decreased import tariffs

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2024

Q162 · What is not an example of protectionism? 9708/12 Oct/Nov 2024

28 What is not an example of protectionism? A the European Union (EU) requiring goods imported into member states to meet safety standards B the Pakistan government increasing the rate of goods and services tax (GST) on some exported goods from 2% to 5% C the Nigeria government banning the import of packaged sugar D the US imposing a 35% tariff on tyres imported from China

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2024

Q163 · A country subsidises domestic production of manufactured goods 9708/13 Oct/Nov 2024

24 A country subsidises domestic production of manufactured goods. What is the most likely outcome? A a rise in economic growth B a rise in imports of manufactured goods C a rise in the rate of inflation D a rise in unemployment

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2024

Q164 · Two statements describing forms of protectionism a government can use are listed 9708/13 Oct/Nov 2024

28 Two statements describing forms of protectionism a government can use are listed. 1 There is a total ban on imports. 2 All imported goods have to be of a specified standard. Which combination correctly describes these two statements? statement 1 statement 2 A administrative barrier import quota B administrative barrier embargo C embargo administrative barrier D embargo import quota

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2024

Q165 · The diagram shows the impact of a government introducing an export subsidy for its… 9708/12 Feb/March 2025

30 The diagram shows the impact of a government introducing an export subsidy for its domestic producers of oil. domestic supply domestic supply + export subsidy price 70 $ 50 42 world supply domestic demand 0 0 20 35 45 50 60 quantity / millions What will be the effect of this export subsidy on the operation of the domestic market? A domestic output of oil will increase by 15 million units B imports of oil will decrease by 25 million units C the domestic price of oil will decrease by $28 D the domestic price of oil will increase by $8

1 marks

Answer: B

This question in 9708/12 Feb/March 2025

Q166 · Which statement correctly describes a tariff? 9708/11 May/June 2025

27 Which statement correctly describes a tariff? A It is a complete ban on imports. B It is a minimum price for domestic producers. C It is a payment to exporters. D It is a tax imposed on imports.

1 marks

Answer: D

This question in 9708/11 May/June 2025

Q167 · A country increases its spending on education and training 9708/12 May/June 2025

4 A country increases its spending on education and training. It pays for this by reducing unemployment benefit payments and increasing taxes on imports of machinery. What is the likely effect of these changes? human capital physical capital A decreases decreases B decreases increases C increases decreases D increases increases

1 marks

Answer: C

This question in 9708/12 May/June 2025

Q168 · Which statement is not a valid reason why a country may impose protectionist measures? 9708/12 May/June 2025

26 Which statement is not a valid reason why a country may impose protectionist measures? A to allow a newly developed domestic industry to grow to a viable size B to enable a country to retain control of an industry it regards as being of strategic importance C to give consumers a wider choice of goods and services D to give time for workers in a declining domestic industry to find alternative employment

1 marks

Answer: C

This question in 9708/12 May/June 2025

Q169 · A country is experiencing a deficit on the current account of its balance of payments 9708/12 May/June 2025

29 A country is experiencing a deficit on the current account of its balance of payments. Which policy decision could reduce the deficit? A decrease in income tax rates B increase in exchange rates C increase in government spending D increase in import tariffs

1 marks

Answer: D

This question in 9708/12 May/June 2025

Q170 · Which argument in favour of protectionism is not generally regarded as economically valid? 9708/13 May/June 2025

26 Which argument in favour of protectionism is not generally regarded as economically valid? A Once the protected industry becomes established, it will produce efficiently. B It prevents heavily subsidised imports from competing unfairly against domestic goods. C It provides time for the protected industry’s workers to be retrained for other work. D It increases the standard of living of the population in general.

1 marks

Answer: D

This question in 9708/13 May/June 2025

Q171 · A government increases the import quota of cars 9708/13 May/June 2025

28 A government increases the import quota of cars. What is the likely effect of this? A jobs will be created in the domestic car industry B prices of cars will fall for domestic consumers C specialisation is reduced D trading partners will retaliate

1 marks

Answer: B

This question in 9708/13 May/June 2025

Q172 · The diagram shows the effect of a government removing the tariff on imports of rice into… 9708/12 Oct/Nov 2025

30 The diagram shows the effect of a government removing the tariff on imports of rice into its country. Sdomestic price of rice W V P1 Sworld + tariff P2 Sworld R X T U Ddomestic O Q1 Q2 Q3 Q4 quantity of rice How would the removal of this tariff affect the consumer surplus and the government's revenue? consumer surplus government revenue A increases by VUT decreases by WVTX B increases by VUT decreases by WVQ3Q2 C increases by P1VUP2 decreases by WVTX D increases by P1VUP2 decreases by WVQ3Q2

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2025