OCR A Level Economics: Globalisation and multinational firms (H460) – 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 follow the topic Globalisation in the OCR A Level Economics (H460) specification, Version 3.0 (June 2026), for first assessment in 2021, Component 2, Macroeconomics. All content is A Level. Every country, firm and figure is invented. Use the study guide and the revision notes for help, and the OCR Economics hub and checklist to track coverage.

Questions

1. Explain what is meant by globalisation. [2]

2. Explain two characteristics of globalisation. [4]

3. Explain two causes of globalisation. [4]

4. A furniture maker produces 50,000 units a year at home at a unit cost of 52. In Country E its unit cost would be 41, including freight of 3. Setting up costs 2.2 million. (a) Calculate the annual saving and the payback period. [3] (b) Freight rises to 6 a unit. Recalculate the payback period and comment. [2]

5. Country E’s real GDP grows 8% a year and its population 1.5%. (a) Calculate the growth of real GDP per head. [2] (b) Explain one reason why this may overstate the improvement in living standards. [2]

6. In a developed economy, money wages rise 8% for skilled and 2% for unskilled workers while prices rise 4%. Calculate the real change for each group and comment on the result. [4]

7. In Country D one crop is 65% of export earnings. The world price falls 30% and volumes are unchanged. (a) Calculate the fall in total export earnings. [2] (b) Explain why such an economy may gain less from globalisation than a diversified one. [2]

8. A foreign-owned plant in Country D has value added of 200 a year: wages 70, taxes 20 and profit 110 (all owned abroad), of which 80 is sent abroad. The initial investment was 250. (a) Calculate the share of value added that is income to residents. [2] (b) After how many full years does cumulative profit sent abroad exceed the initial investment? [2] (c) Explain one benefit of the plant that these figures omit. [2]

9. Evaluate the impact of multinational firms on the world economy. [10]

10. Country A’s exports are 18% of its GDP, and 25% of its exports go to Country E. Country E’s import growth falls by 6 percentage points. (a) Calculate the effect on Country A’s GDP growth. [2] (b) Explain one other way Country E’s slowdown could affect Country A. [2] (c) Assess whether the effect is likely to be large. [2]

11. Evaluate the impact of globalisation on developed, emerging and developing economies. [12]

Answers

1. Globalisation is the process by which economies become more closely linked and dependent on each other [1] as goods, services, capital, people, technology and ideas move across borders [1]. [2] Examiner insight: Name the process and at least two flows; “trade between countries” alone describes one channel.

2. Any two, each with development. Trade grows faster than output [1], so trade intensity rises [1]. Multinational firms spread production across countries [1], linking suppliers in global supply chains [1]. (Also acceptable: FDI, financial integration, migration, technology flows.) [4] Examiner insight: Each characteristic needs a second step that says what it means; a label alone gains less.

3. Any two, each with a link. Lower transport costs [1] make distant production and sale profitable [1]. Information technology [1] lets firms coordinate suppliers and customers across time zones [1]. (Also acceptable: trade or capital liberalisation, opening of emerging economies.) [4] Examiner insight: Show how the cause leads to more cross-border activity, not just that it exists.

4. (a) Saving per unit = 52 - 41 = 11 [1]. Annual saving = 11 x 50,000 = 550,000 [1]. Payback = 2.2 million / 550,000 = 4 years [1]. [3] (b) New cost = 41 + 3 = 44, saving 8, annual 400,000 [1]. Payback = 5.5 years, longer, so the move is less attractive [1]. [2] Examiner insight: Show the saving per unit before multiplying, and state units; a comment should refer to the change in the figure.

5. (a) 1.08 / 1.015 - 1 [1] = 6.4% [1]. [2] (b) Per head figures are averages [1], so gains may go to a few while others see little change, or profits may leave the country [1]. [2] Examiner insight: Subtracting population growth from GDP growth is a common slip; use the ratio of growth factors.

6. Skilled: 1.08 / 1.04 - 1 [1] = +3.8% [1]. Unskilled: 1.02 / 1.04 - 1 [1] = -1.9% [1]. Skilled workers gain in real terms and unskilled workers lose, so inequality widens. [4] Examiner insight: A comment on the contrast adds more than restating the two figures.

7. (a) 0.65 x 30 = 19.5% fall [1] in total export earnings [1]. [2] (b) Reliance on one product exposes it to price swings [1], and a fall in earnings reduces income and its ability to pay for imports and investment [1]. [2] Examiner insight: State that the fall is in total earnings, not in the crop alone.

8. (a) Resident income = 70 + 20 = 90 [1]; 90 / 200 = 45% [1]. [2] (b) Cumulative outflow: 80, 160, 240, 320 [1], so 4 years (240 is below 250 and 320 is above) [1]. [2] (c) Any one: technology and skills spread to local firms; local suppliers gain orders; export earnings. Explained in context [2]. [2] Examiner insight: For (b) check the year before the crossing to justify “full years”.

9. Gains (up to 4): FDI moves capital to where it is productive [1]; technology and skills spread [1]; competition and scale lower prices [1]; jobs and exports raise incomes in host economies [1]. Costs (up to 3): profits sent abroad and transfer pricing reduce income and tax for hosts [1]; market power crowds out local firms [1]; footloose behaviour and weak standards leave hosts exposed [1]. Evaluation (up to 3): net effect depends on local linkages and tax rules [1]; on the host’s bargaining power and regulation [1]; judgement on balance with a reason, such as gains are larger where the host captures spillovers [1]. [10] Examiner insight: Cover the world economy, not only one host, and build the judgement from the conditions you named.

10. (a) Effect = 0.18 x 0.25 x 6 [1] = 0.27 percentage points [1]. [2] (b) Lower commodity prices if Country E slows, which helps importers and hurts exporters [1]; or less investment from Country E, or exchange rate effects, explained [1]. [2] (c) The direct effect is small (0.27 points) [1], but larger if exports are concentrated on Country E or other markets cannot replace the lost demand [1]. [2] Examiner insight: Quote units as percentage points, and make the judgement depend on stated conditions.

11. Developed (up to 3): cheaper imports and larger markets raise real incomes [1]; competition and FDI raise productivity [1]; structural unemployment and pressure on low-skilled wages arise [1]. Emerging (up to 3): export-led growth, FDI and technology raise output per head [1]; poverty falls [1]; dependence on foreign demand and inequality between regions are risks [1]. Developing (up to 3): access to markets, aid and cheaper capital goods [1]; reliance on volatile primary exports and weak bargaining power [1]; limited infrastructure and skills may deter FDI [1]. Evaluation (up to 3): outcomes depend on starting position and institutions [1]; on policies such as retraining and diversification [1]; judgement on balance with a reason, such as gains are widest where institutions allow the poor to share them [1]. [12] Examiner insight: Treat the three groups separately and say who gains within each; a general list of pros and cons does not show this.

Where marks are usually lost

• Describing globalisation as trade alone.
• Naming a characteristic or cause without saying what it does.
• Subtracting population growth from GDP growth instead of using growth factors.
• Mixing up percentage and percentage-point changes.
• Forgetting that profit sent abroad reduces income to residents.
• Writing one list of pros and cons for all economies in an evaluation of three groups.
• Concluding “it depends” without naming the condition that decides the answer.
• Quoting a payback or share without units or comment.

Next steps

• Re-read the study guide for any weak area.
• Use the revision notes for a final check.
• Visit the OCR Economics hub and the checklist.
• Take the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

OCR, A Level in Economics (H460) specification, Version 3.0 (June 2026), for first assessment in 2021, Component 2 content, area of study The global context, topic Globalisation.