International Economics

What International Economics covers

Covers the economics of an open world: globalisation and who gains from it, comparative advantage, trading blocs and the WTO, protectionism, the balance of payments, exchange rates, and what makes a country competitive.

The 18 subtopics

Each one has its own page.

• What globalisation is and what has driven itRecall questions on the characteristics of globalisation and on containerisation, communications, trade liberalisation, financial deregulation and the growth of trading blocs.Open →
• The winners and losers from globalisationRecall questions on the effects on countries, producers, consumers, workers, the environment and inequality.Open →
• Absolute and comparative advantageRecall questions on what each means, calculating opportunity cost in a two-good model, and reading comparative advantage off a PPF.Open →
• The assumptions and limitations of comparative advantageRecall questions on the assumptions the theory makes and on transport costs, trade barriers, exchange rates and factor immobility as limitations.Open →
• The gains and costs of international specialisationRecall questions on higher output, economies of scale, choice and innovation, set against structural unemployment, over-dependence and environmental harm.Open →
• Pattern of tradeRecall questions on comparative advantage, emerging economies, trading blocs and exchange rates as influences on who trades what with whom.Open →
• Terms of tradeRecall questions on how the terms of trade are calculated, what moves them, and what a change means for a country.Open →
• Types of trading bloc and the hierarchy of integrationRecall questions on regional and bilateral trade agreements, free trade areas, customs unions, common markets and monetary unions, what each stage adds, and why a country might be reluctant to join a monetary union.Open →
• Trade creation, trade diversion and the costs of trading blocsRecall questions on the conditions for a successful monetary union and the Eurozone’s difficulties, trade creation, the benefits of regional trade agreements, trade diversion, and the costs to sovereignty, employment and the distribution of gains.Open →
• The World Trade OrganisationRecall questions on what the WTO does, the most favoured nation principle, dispute resolution, and its uneasy relationship with regional agreements.Open →
• Why governments restrict trade, and the instruments usedRecall questions on infant industries, dumping, national security and the current account as justifications, and on tariffs, quotas, subsidies and non-tariff barriers.Open →
• The effects of protectionismRecall questions on the impact on consumers, producers, governments and living standards, and on retaliation and deadweight loss.Open →
• Balance of payments in a global contextRecall questions on the current, capital and financial accounts, why the balance of payments sums to zero, the causes and consequences of deficits and surpluses, expenditure-switching, expenditure-reducing and supply-side policies, and global imbalances.Open →
• Exchange rate systems, and appreciation against revaluationRecall questions on floating, fixed and managed systems, and on what separates appreciation from revaluation and depreciation from devaluation.Open →
• What moves a floating rate, and how governments interveneRecall questions on interest rates, inflation, the current account, speculation, investment flows, growth and political instability as influences on a floating rate, intervention through reserves and interest rates, and the consequences of competitive devaluation.Open →
• The Marshall-Lerner condition and the J-curve effectRecall questions on when a depreciation improves the current account, why it worsens first, and the effects on growth, inflation and investment.Open →
• Measuring competitiveness: unit labour costs and export pricesRecall questions on calculating unit labour costs, relative export prices, and what a rise in either means.Open →
• What determines competitiveness, and the cost of losing itRecall questions on productivity, wages, investment, research, regulation and infrastructure, and on the consequences of becoming uncompetitive.Open →

What you need to know

Answer each one before you reveal it.

Take International Economics further

The same content, four other ways.

Commonly confused

Pairs that lose marks when they are blurred together.

• Absolute advantage vs Comparative advantage

  Absolute advantage: the ability to produce more of a good than another country from the same resources. Comparative advantage: the ability to produce a good at a lower opportunity cost than another country.

• Trade creation vs Trade diversion

  Trade creation: the shift of production toward a lower-cost member once tariffs between members are removed. Trade diversion: the shift of production away from a lower-cost non-member toward a higher-cost member.

• Depreciation vs Devaluation

  Depreciation: a fall in the value of a currency brought about by market forces under a floating system. Devaluation: a fall in the value of a currency brought about by a government decision under a fixed system.

Questions from this topic

Each one with the model answer underneath.

1. 1

   Define globalisation.

   Model answer

   Globalisation is the increasing integration and interdependence of national economies through the growth of international trade, investment, and the movement of labour and capital across borders.

2. 2

   How does increased international trade in goods and services relate to globalisation?

   Model answer

   It is a key characteristic of globalisation, reflecting the growing economic integration between countries.

3. 3

   What role does the movement of capital, including foreign direct investment, play in globalisation?

   Model answer

   Greater movement of capital between countries, including FDI, is a characteristic of globalisation as it reflects increased financial integration across borders.

4. 4

   Why is increased international labour mobility considered a characteristic of globalisation?

   Model answer

   It reflects the growing interdependence of economies as workers move across borders to seek employment opportunities.

5. 5

   What type of corporations are associated with globalisation due to their operations spanning multiple countries?

   Model answer

   Multinational and transnational corporations, which operate across multiple countries.

6. 6

   How does the transfer of technology and knowledge across borders characterise globalisation?

   Model answer

   Greater transfer of technology and knowledge across national borders is a characteristic of globalisation, enabling the spread of innovations and productive techniques internationally.

What is inside Levo

Six ways to work the same material.

International Economics revision questions

What does International Economics cover in Edexcel A-Level Economics A?

18 subtopics: what globalisation is and what has driven it, the winners and losers from globalisation, absolute and comparative advantage, the assumptions and limitations of comparative advantage, the gains and costs of international specialisation, pattern of trade, terms of trade, types of trading bloc and the hierarchy of integration, trade creation, trade diversion and the costs of trading blocs, the world trade organisation, why governments restrict trade, and the instruments used, the effects of protectionism, balance of payments in a global context, exchange rate systems, and appreciation against revaluation, what moves a floating rate, and how governments intervene, the marshall-lerner condition and the j-curve effect, measuring competitiveness: unit labour costs and export prices and what determines competitiveness, and the cost of losing it. Each one has its own page with questions and model answers.

How is International Economics organised?

By the Edexcel 9EC0 specification, subtopic by subtopic, so it matches the order you are taught it in.