Macroeconomics: The Global Context

What Macroeconomics: The Global Context covers

The Global Context is examined on component 02 of OCR Economics, Macroeconomics. 112 recall questions across 8 subtopics.

The 8 subtopics

Each one has its own page.

• Patterns of international trade and global supply chainsRecall questions on international trade, visible and invisible trade, intra-industry trade, changing patterns of world trade, global supply chains and fragmented production.Open →
• Advantages and disadvantages of international tradeRecall questions on the advantages and disadvantages of international trade for developed, emerging and developing economies, commodity dependence, inequality and ethical objections.Open →
• Exchange rate calculations and how exchange rates are determinedRecall questions on exchange rates, appreciation and devaluation, currency conversion calculations, demand for and supply of pounds, and how a central bank defends a fixed peg.Open →
• Exchange rate changes, the Marshall-Lerner condition and exchange rate systemsRecall questions on managed floats, causes and effects of depreciation and appreciation, the Marshall-Lerner condition and J-curve, and fixed versus floating exchange rate systems.Open →
• Globalisation, international competitiveness and comparative advantageRecall questions on globalisation and its causes, transnational corporations, price and non-price competitiveness, relative unit labour costs, and absolute and comparative advantage calculations.Open →
• Terms of trade and the impact of globalisation and emerging economiesRecall questions on calculating and interpreting the terms of trade, and the effects of globalisation, emerging economies and transnational corporations on developed and developing countries.Open →
• Protectionism and the effects of a tariffRecall questions on protectionism, tariffs, quotas and other barriers, the infant industry argument, and the tariff diagram with revenue and welfare loss calculations.Open →
• Quotas, trade creation, economic integration and the World Trade OrganisationRecall questions on the quota diagram, trade creation and diversion, customs unions and the stages of economic integration, free trade, and the role of the World Trade Organisation.Open →

What you need to know

Answer each one before you reveal it.

Take Macroeconomics: The Global Context 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 from the same resources than another country. Comparative advantage: the ability to produce a good at a lower opportunity cost than another country.

• Appreciation vs Revaluation

  Appreciation: a rise in a floating currency's value brought about by the market. Revaluation: a rise in a fixed currency's value brought about by an official decision.

• Visible trade vs Invisible trade

  Visible trade: trade in physical goods that cross a border. Invisible trade: trade in services, which cross no border in physical form.

Questions from this topic

Each one with the model answer underneath.

1. 1

   What is international trade?

   Model answer

   It is the exchange of goods and services across national borders, made up of exports sold abroad and imports bought from abroad.

2. 2

   Distinguish visible from invisible trade.

   Model answer

   Visible trade is trade in physical goods, while invisible trade is trade in services such as banking, insurance and tourism.

3. 3

   Why do countries trade rather than try to produce everything themselves?

   Model answer

   Countries differ in their factor endowments, climate, technology and skills, so each specialising where its opportunity cost is lowest and then trading raises total output and consumption beyond what self-sufficiency allows.

4. 4

   What is intra-industry trade?

   Model answer

   It is trade in similar products within the same industry, such as a country both importing and exporting cars, driven by product differentiation and consumers' taste for variety.

5. 5

   Why is so much world trade between similar developed economies rather than between rich and poor ones?

   Model answer

   Much of it is intra-industry trade in differentiated manufactures, which depends on high incomes, similar tastes and economies of scale rather than on differences in resources.

6. 6

   Describe the broad path of world trade as a share of world output since the middle of the twentieth century.

   Model answer

   It rose strongly for several decades as transport and communication costs fell and tariffs were cut, then flattened out after the financial crisis of 2008 rather than continuing to climb.

What is inside Levo

Six ways to work the same material.

Macroeconomics: The Global Context revision questions

What does Macroeconomics: The Global Context cover in OCR A-Level Economics?

8 subtopics: patterns of international trade and global supply chains, advantages and disadvantages of international trade, exchange rate calculations and how exchange rates are determined, exchange rate changes, the marshall-lerner condition and exchange rate systems, globalisation, international competitiveness and comparative advantage, terms of trade and the impact of globalisation and emerging economies, protectionism and the effects of a tariff and quotas, trade creation, economic integration and the world trade organisation. Each one has its own page with questions and model answers.

How is Macroeconomics: The Global Context organised?

By the OCR H460 specification, subtopic by subtopic, so it matches the order you are taught it in.