Edexcel IGCSE Business: Business and the international economy (4BS1) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover Topic 1, section 1.5 “Business and the international economy” (points 1.5.1 to 1.5.4) in the Pearson Edexcel International GCSE in Business (4BS1) specification, Issue 2, February 2026. Use the study guide and revision notes first if you need them. Course links: the 4BS1 Business hub, the printable checklist and the free diagnostics. Every business named here is invented and every exchange rate is made up for practice. Give money to two decimal places where the answer is not whole. Show the rate and whether you multiply or divide.

Questions

1. Define the term globalisation. [2]

2. State two threats of globalisation for a small business that sells only in its home town. [2]

3. Kestrel Tools, a UK business, sells a part for £65. The exchange rate is £1 = USD 1.30. Calculate the price of the part in US dollars. [2]

4. Ardent Bakeware, a UK business, imports 4,200 moulds at EUR 6.50 each.

(a) Calculate the total cost in euros. [1] (b) The exchange rate is £1 = EUR 1.15. Calculate the cost in pounds. [2] (c) The rate moves to £1 = EUR 1.25. Calculate the new cost in pounds and the saving. [2]

5. A UK exporter prices a jacket at £120. The exchange rate changes from £1 = USD 1.25 to £1 = USD 1.40.

(a) Calculate the US dollar price of the jacket before and after the change. [2] (b) Explain one possible effect on the exporter. [2]

6. Explain two benefits to a business of becoming a multinational. [4]

7. Explain one benefit and one possible drawback to a country where a multinational opens a factory. [4]

8. A UK importer owes USD 2,400. The rate changes from £1 = USD 1.60 to £1 = USD 1.20.

(a) Calculate the change in the pound cost. [2] (b) Analyse the effect on the importer. [2]

9. Cobdale Textiles is a UK business with 25 employees. It makes scarves at a cost of £18 per scarf and sells 6,000 a year to a US retailer at a fixed price of USD 30 each. The rate is £1 = USD 1.50.

(a) Calculate Cobdale’s profit per scarf and total annual profit from this sale, in pounds. [3] (b) The pound weakens to £1 = USD 1.25. Calculate the new profit per scarf and total annual profit. [3] (c) Analyse one reason this change is good news for Cobdale. [2]

10. Orchid Motors, a large car maker based in another country, plans to build a plant employing 1,500 people in a lower-income country. Evaluate whether this is likely to benefit the host country. [8]

11. Hollin Crafts, with 20 employees, sells handmade ceramics from a shop and is thinking of selling abroad online. Justify whether Hollin should do this. [6]

12. Fernlow Ltd is a large UK business. Each year it sells goods worth EUR 180,000 to customers in the euro area and buys materials costing USD 39,000. Last year the rates were £1 = EUR 1.20 and £1 = USD 1.30. This year they are £1 = EUR 1.00 and £1 = USD 1.10. Assume the sales and purchases are the same as last year.

(a) Calculate the pound value of the sales this year and last year, and the change. [3] (b) Calculate the pound cost of the materials this year and last year, and the change. [3] (c) Evaluate whether the pound’s fall is good for Fernlow. [5]

Answers

1. Globalisation is the process by which markets, businesses and economies become more closely linked [1] so that goods, services, money and ideas move across borders more easily [1]. [2] Examiner insight: A definition earns credit for what is being linked and what moves; “the world getting smaller” on its own says very little.

2. Any two from: overseas rivals can sell to its local customers, often at lower prices [1]; it may lose customers or have to cut prices and margins [1]; suppliers may be overseas, so delays or price rises abroad affect it. A threat only needs to be stated. [2] Examiner insight: For a “state” question, give two different threats in brief. Explaining them goes beyond what the command word asks.

3. Home to foreign, so multiply: 65 × 1.30 [1] = USD 84.50 [1]. [2] Examiner insight: Show the operation and give the currency label. An answer with no currency label is incomplete.

4. (a) 4,200 × 6.50 = EUR 27,300 [1] (b) Foreign to home, so divide: 27,300 ÷ 1.15 [1] = £23,739.13 [1] (c) 27,300 ÷ 1.25 = £21,840 [1]; saving = 23,739.13 − 21,840 = £1,899.13 [1] [5] Examiner insight: Make the stages visible: euros first, then pounds. A slip in an early step is easier to trace if you have written it down.

5. (a) Before: 120 × 1.25 = USD 150 [1]; after: 120 × 1.40 = USD 168 [1] (b) The US price rises by USD 18 [1], so US buyers may switch to cheaper rivals and the exporter’s sales may fall [1]. [4] Examiner insight: An explain answer needs the effect and a reason it happens. “Sales fall” without the link to the higher price is incomplete.

6. Any two benefits, each with a development, for example: access to new markets [1] which can raise sales revenue [1]; lower costs from cheaper labour or materials abroad [1] which can raise profit per unit [1]. Other valid pairs: avoiding tariffs by producing inside the market, economies of scale, spreading risk, using a global brand. [4] Examiner insight: Give two clearly different benefits. Two wordings of the same point are likely to count once.

7. Benefit, for example: the factory creates jobs [1] so local people earn wages and spend more in local shops [1]. Drawback, for example: profits may be sent abroad to the owners [1] so less money stays in the local economy [1]. Other valid points: tax revenue, skills, local firms closing, environmental damage. [4] Examiner insight: The question asks about the host country, not the company. A benefit that only helps the multinational, such as lower costs, does not answer it.

8. (a) At 1.60: 2,400 ÷ 1.60 = £1,500 [1]; at 1.20: 2,400 ÷ 1.20 = £2,000, so the cost rises by £500 [1] (b) The pound now buys fewer dollars, so the same goods cost more in pounds [1]; costs rise, so the importer’s profit falls unless it raises prices, which could reduce sales [1]. [4] Examiner insight: “Analyse” asks for a chain of cause and effect. Link the lower purchasing power of the pound to cost, then to profit or prices.

9. (a) Revenue per scarf = 30 ÷ 1.50 = £20 [1]; profit per scarf = 20 − 18 = £2 [1]; total = 2 × 6,000 = £12,000 [1] (b) Revenue per scarf = 30 ÷ 1.25 = £24 [1]; profit per scarf = 24 − 18 = £6 [1]; total = 6 × 6,000 = £36,000 [1] (c) The fixed dollar price now converts into more pounds per scarf [1], so profit per scarf rises from £2 to £6 and the total from £12,000 to £36,000 [1]. [8] Examiner insight: Quote figures from your own working in the analysis part. Comments that use the numbers in the case are stronger than general statements.

10. Benefit: 1,500 jobs give wages that are spent locally [1], which supports shops and other firms [1]. Further benefit: tax paid and new skills or technology may help the country [1]. Drawback: local car parts or repair firms may lose customers to a lower-cost rival [1] and may close [1]. Further drawback: profits may be sent to the owners abroad, and the plant could move if costs rise elsewhere [1]. Judgement: for example, the benefit is likely to be larger if the country has high unemployment and the plant stays for many years, but smaller if most profit leaves [1], with a reason linked to the case [1]. [8] Examiner insight: Evaluate needs both sides and a conclusion that depends on something stated in the case. A conclusion that merely repeats “it has pros and cons” is weak.

11. For selling abroad: a larger market, so more sales revenue [1]; less dependence on the home shop [1]. Against: higher costs of packing, delivery and breakage risk [1]; lower-priced overseas rivals and limited experience of other markets [1]; exchange rate changes may alter earnings. Judgement: Hollin should try it on a small scale, for example a limited range and a few countries [1], because handmade goods can attract buyers who value difference, and this tests demand before large costs are committed [1]. [6] Examiner insight: Justify means you must choose and give a reason. Write a decision and support it with a point from this business, not a general rule.

12. (a) Last year: 180,000 ÷ 1.20 = £150,000 [1]; this year: 180,000 ÷ 1.00 = £180,000 [1]; change = +£30,000 [1] (b) Last year: 39,000 ÷ 1.30 = £30,000 [1]; this year: 39,000 ÷ 1.10 = £35,454.55 [1]; change = +£5,454.55 [1] (c) Sales gain £30,000 and material costs rise £5,454.55, so the net gain is about £24,545 [1]; the weaker pound helps because exports earn more pounds [1]; a weaker pound makes imports dearer, which reduces some of that gain [1]. The gain assumes buyers keep buying at the same volume, and other costs may change [1]. Judgement: on these figures it is good for Fernlow because the gain far outweighs the extra cost [1]. [11] Examiner insight: Use your own results from earlier parts in the evaluation, and include a limit on them. A conclusion needs to follow from the calculated figures.

Where marks are usually lost

• Multiplying instead of dividing when changing foreign currency into pounds.
• Giving a final answer with no currency label.
• Writing “more competition” without saying who competes with whom and what happens to the business.
• Describing benefits of a multinational to the company when the question asks about the host country.
• Giving two points that are the same idea worded twice.
• Leaving out the judgement in an evaluate or justify answer.
• Calculating the import and export effects but not saying which is larger.
• Giving advice that does not use the facts in the case, such as the size of the business.

Next steps

• Revise with the revision notes and the study guide.
• Go to the 4BS1 Business hub or the printable checklist.
• Take the free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

What do these international economy practice questions cover? They follow Pearson Edexcel International GCSE Business (4BS1) section 1.5: globalisation, multinationals, exchange rate calculations and the impact of exchange rate changes on importers and exporters.

How do you change a foreign currency into pounds? If the rate is given as £1 = a number of foreign units, divide the foreign amount by the rate to get pounds, and multiply pounds by the rate to get the foreign currency. Multiplying instead of dividing is a common error.

Do you need to label the currency in an exchange rate answer? Yes. State the currency in the final answer and give money to a sensible number of decimal places, usually two.

What should you do when a business both imports and exports? Calculate the effect of the exchange rate change on each side, then say which effect is larger before deciding whether the change helps or harms the business.

Official syllabus

Pearson Edexcel International GCSE in Business (4BS1), Specification, Issue 2, February 2026, published by Pearson Education Limited. Topic 1: Business activity and influences on business, section 1.5 “Business and the international economy”, points 1.5.1 to 1.5.4.