O Level Commerce: Globalisation of Trade — Practice Questions

These questions practise Topic 3, Globalisation of trade, of Cambridge O Level Commerce (7100, 2026-2028): the benefits and challenges of international trade, Balance of Trade and Balance of Payments calculations, free trade and trading blocs, trade restrictions, support for exporters, and global supply chains and their risks.

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 available free from your board.

Related: Globalisation of Trade study guide | Globalisation of Trade revision notes

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Section A - multiple choice

1. A government limits imports of foreign cars to 20 000 a year. This is: [1] A an embargo B a quota C a tariff D free trade

2. Which item is included in the Balance of Payments but not in the Balance of Trade? [1] A exports of rice B imports of steel C earnings from foreign tourists D imports of cars

3. In a complex supply chain, which comes between the agent and the retailer? [1] A manufacturer B wholesaler C consumer D supplier

Section B - structured questions

4. Explain two benefits of international trade to a country such as Sri Lanka, which imports fuel and exports tea. [4]

5. Zara’s Spices exports packaged spices from India to Canada. (a) Explain three challenges Zara’s Spices faces as an exporter. [6] (b) Explain how a fall in the value of the Indian rupee against the Canadian dollar could affect the business. [3]

6. The table shows trade figures for Country K ($ billion).

Item	2025
Exports of goods	84
Imports of goods	71
Exports of services	22
Imports of services	39
Net investment and income flows	-3

(a) Calculate the Balance of Trade. [2] (b) Calculate the Balance of Payments using all the items shown. [2] (c) Interpret your answers. [2]

7. Explain how two commercial activities could improve a country’s Balance of Payments. [4]

8. (a) Define free trade. [1] (b) Describe two features of a trading bloc. [2] (c) Discuss whether a small country should join a trading bloc. [6]

9. Explain two effects of a tariff on imported electronics for a retailer that sells imported phones. [4]

10. Describe two sources of support available to new exporters. [2]

11. A clothing brand buys cotton upstream, makes garments in its own factory and sells through retailers downstream. (a) Explain what is meant by upstream and downstream. [2] (b) Explain why suppliers are important in the global supply chain. [2] (c) Explain two benefits of global supply chain management to the brand. [4]

12. The brand’s cotton comes from one region, which has suffered floods, and there are reports of child labour at one supplier. Evaluate the importance of risk assessment for the brand. [6]

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Answers

1. B. [1]

2. C. [1]

3. B. [1]

4. Any two explained: Sri Lanka can obtain fuel it cannot produce itself, giving a wider choice of goods [2]; tea exports earn foreign currency and create jobs [2]; a higher standard of living [2]; more investment from foreign businesses [2]. [max 4]

5. (a) Any three explained: distance - long, costly delivery and freshness issues [2]; documentation - customs and food safety certificates [2]; non-payment - difficult to recover money from a Canadian buyer [2]; different legal systems - food labelling rules differ [2]; competition from other spice exporters [2]; customs duties raise the price [2]. [max 6] (b) Indian spices become cheaper for Canadian buyers [1], so demand may increase [1]; revenue in rupees from each sale rises if the price in dollars stays the same [1].

6. (a) 84 - 71 = +$13 billion (surplus). [2] (b) 13 + (22 - 39) + (-3) = 13 - 17 - 3 = -$7 billion (deficit). [2] (c) Country K sells more goods than it buys [1], but imports of services and outflows of income exceed this, so overall more money leaves the country than enters [1].

7. Any two explained: manufacturers winning export orders increase money flowing in [2]; tourism businesses attracting foreign visitors earn foreign currency [2]; banks or insurers selling services abroad [2]; buying from domestic suppliers instead of importing reduces outflows [2]. [max 4]

8. (a) Trade between countries without restrictions such as tariffs, quotas or embargoes. [1] (b) Any two: no or reduced tariffs between members [1]; a common external tariff on non-members [1]; common trade rules [1]; freer movement of goods [1]. [max 2] (c) [6] For: tariff-free access to a much bigger market for exporters; cheaper imported materials; more foreign investment. Against: domestic firms face stronger competition and may close; must accept common rules; trade with non-members may become harder. Conclusion: likely to benefit a small country with competitive exporters, but it may need support for vulnerable industries.

9. Any two explained: the retailer’s cost of buying phones rises [2]; it may have to raise prices, reducing sales [2]; or keep prices the same and accept lower profit [2]; it may switch to locally made products [2]. [max 4]

10. Any two: international trade fairs [1]; cheaper bank loans [1]; insurance guarantees against non-payment [1]. [max 2]

11. (a) Upstream: suppliers providing materials, such as cotton, to the enterprise [1]; downstream: distribution of finished goods to retailers and consumers [1]. (b) Their price, quality and reliability decide whether the brand can produce on time and at the right cost [2]. (c) Any two explained: lower cost of production and labour by making in lower-cost locations [2]; lower purchasing costs by buying in bulk globally [2]; better logistics and communication help track orders [2]. [max 4]

12. [6] Natural disaster risk: relying on one flood-prone region could stop production; risk assessment would lead the brand to find suppliers in other regions or hold extra stock. Ethical risk: child labour damages reputation and may lead to boycotts; assessment would include supplier audits. Limits: risk assessment costs time and money and cannot remove every risk. Conclusion: very important, because both risks could seriously harm sales and supply.

A note on exam technique for this topic

Show the formula and the sign for every balance calculation (surplus or deficit). In “discuss” and “evaluate” questions, apply the points to the country or business in the question and end with a justified judgement.

Frequently asked questions

How do I know whether a balance is a surplus or deficit? Subtract outflows from inflows. A positive answer is a surplus; a negative answer is a deficit.

What are the six global supply chain risks in 7100? Environmental (such as pollution and deforestation), natural disasters, financial, ethical, technological and political risks.

What is the difference between an embargo and a quota? A quota limits the quantity imported; an embargo bans the trade altogether.

Official syllabus

Cambridge O Level Commerce (7100) syllabus for 2026, 2027 and 2028 - official syllabus PDF.