OCR GCSE Economics: Exchange rates, globalisation and measuring development (J205) – 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 sections 4.3 and 4.4 of the OCR GCSE (9-1) Economics specification (J205, version 2.0, first assessment 2019): exchange rates and globalisation. J205 has no tiers. Every country, firm and figure here is invented. Revise first with the study guide or the revision notes. Other useful pages: the OCR GCSE Economics hub, a printable topic checklist and the diagnostics.

Questions

1. State two factors that could increase the demand for a country’s currency. [2]

2. Use the illustrative rate £1 = €1.20.

(a) Convert £450 into euros. [1] (b) Convert €708 into pounds. [1] (c) A traveller changes £800 into euros. The bank takes a £16 fee first. Calculate the euros received. [2]

3. The table shows the demand for and supply of pounds in a currency market (illustrative).

Rate (euros per £)	1.05	1.10	1.15	1.20	1.25
Pounds demanded (millions)	120	100	80	60	40
Pounds supplied (millions)	40	60	80	100	120

(a) Identify the rate at which the market clears and the quantity of pounds traded. [2] (b) Fewer tourists visit Country A, so demand falls by 40 million pounds at every rate. Find the new equilibrium rate and calculate the percentage change in the rate. [3] (c) State whether the pound has appreciated or depreciated, and name the curve that shifted. [1]

4. Illustrative average rates, euros per pound: year 1, 1.18; year 2, 1.22; year 3, 1.30; year 4, 1.24; year 5, 1.12.

(a) Calculate an index for years 3 and 5 with year 1 = 100. [2] (b) Calculate the percentage change from year 3 to year 5. [1] (c) Describe the trend and suggest one cause using demand and supply. [2]

5. The pound depreciates. Explain the likely effect on (a) a furniture maker that exports most of its output [2], and (b) a firm that imports machine parts. [2]

6. A machine maker in Country A sells 600 machines a year at £2,500 each to a country that uses dollars. The rate rises from £1 = 1.40 dollars to £1 = 1.75 dollars (illustrative).

(a) Calculate the price of one machine in dollars before and after. [2] (b) Calculate the percentage change in the dollar price. [1] (c) Demand for the machines has a price elasticity of −0.8. Work out how many are now sold. [2] (d) Calculate the change in revenue in pounds, assuming the pound price is unchanged. [2]

7. Explain two factors that have driven globalisation. [4]

8. Explain how a country’s development can be measured, using one indicator each for health, education and technology. [6]

9. Country M has GDP of 72 billion dollars and 18 million people. Country N has GDP of 150 billion dollars and 25 million people. Life expectancy is 71 years in M and 66 in N.

(a) Calculate GDP per capita for each country. [2] (b) M’s GDP grows by 3.5% and its population by 1.5%. Calculate the percentage growth in GDP per capita. [2] (c) Explain why GDP per capita alone may not show that N is more developed than M. [2]

10. Evaluate whether a fall in the value of a country’s currency benefits both consumers and producers. [8]

11. Evaluate the costs and benefits of globalisation to workers, producers and consumers in a developed country, including the effect on sustainability. [8]

12. Evaluate the costs and benefits of globalisation to workers, producers and consumers in a less developed country, including the effect on sustainability. [8]

Answers

1. Two of: higher overseas demand for the country’s exports; higher interest rates attracting overseas savers; more foreign tourists or investment; expectations that the currency will rise. One for each factor [1] [1]. [2] Examiner insight: name factors that raise demand for the currency itself. Saying “the currency becomes stronger” restates the result and does not give a cause.

2. (a) 450 × 1.20 = €540 [1]. (b) 708 ÷ 1.20 = £590 [1]. (c) 800 − 16 = £784 [1]; 784 × 1.20 = €940.80 [1]. [4] Examiner insight: show the direction of the operation. A clear working line for each part makes any slip easy to spot and fix.

3. (a) Demand equals supply at 80 million pounds [1], at a rate of 1.15 euros per pound [1]. (b) New demand is 80, 60, 40, 20, 0 [1]. It equals supply at 60 million, at a rate of 1.10 [1]. Change = (1.10 − 1.15) ÷ 1.15 = −4.3% [1]. (c) The pound has depreciated because the demand curve for pounds shifted left [1]. [6] Examiner insight: give both the number and the word. “The rate falls” is less complete than saying the pound depreciates because the demand curve moved.

4. (a) Year 3: 1.30 ÷ 1.18 × 100 = 110.2 [1]. Year 5: 1.12 ÷ 1.18 × 100 = 94.9 [1]. (b) (1.12 − 1.30) ÷ 1.30 = −13.8% [1]. (c) The pound rose to year 3, then fell, ending below its year 1 level [1]. A possible cause is lower overseas demand for exports, shifting demand for pounds left, or higher supply as residents bought more imports [1]. [5] Examiner insight: back a description of a trend with numbers taken from the data, and treat any cause as a suggestion, since data alone does not prove why a rate moved.

5. (a) A depreciation makes the exporter’s goods cheaper in foreign currency [1], so overseas demand and sales may rise, increasing revenue [1]. (b) The importer must pay more pounds for each unit of foreign currency [1], so its costs rise and it may raise prices or earn lower profit [1]. [4] Examiner insight: link the exchange rate to price first, then to quantity or cost. A statement that “exports increase” with no reason is less convincing.

6. (a) Before: 2,500 × 1.40 = 3,500 dollars [1]. After: 2,500 × 1.75 = 4,375 dollars [1]. (b) (4,375 − 3,500) ÷ 3,500 = +25% [1]. (c) Quantity change = −0.8 × 25 = −20% [1]. New quantity = 600 × 0.8 = 480 [1]. (d) Before: 600 × 2,500 = £1,500,000 [1]. After: 480 × 2,500 = £1,200,000, a fall of £300,000 [1]. [7] Examiner insight: apply elasticity to the percentage price change, not to the price itself, and state which currency each price or revenue is in.

7. Two factors, each named and explained. For example, lower transport costs [1] make it cheaper to ship goods to distant markets, so trade grows [1]. Improved communications technology [1] allows firms to manage production and sell across borders [1]. Trade agreements and multinational companies are other valid factors. [4] Examiner insight: a factor needs a link to more cross-border trade or investment. A bare list of factors gives little to reward beyond naming them.

8. Health: life expectancy or doctors per 1,000 people [1] shows health and access to care [1]. Education: average years of schooling or literacy [1] shows skills and opportunity [1]. Technology: internet users per 100 people [1] shows access to modern tools [1]. [6] Examiner insight: say what each indicator shows about living standards, not only what it is called.

9. (a) M: 72 billion ÷ 18 million = 4,000 dollars [1]. N: 150 billion ÷ 25 million = 6,000 dollars [1]. (b) 1.035 ÷ 1.015 − 1 = 2.0% (1.97%) [2]. (c) GDP per capita is an average and ignores how income is shared [1]. N’s life expectancy is lower, which suggests poorer health, so higher income does not guarantee higher development [1]. [6] Examiner insight: use the data given. A reference to M’s higher life expectancy supports the argument better than a general comment.

10. Producers gain: exports are cheaper abroad, so sales rise [1]. Consumers gain indirectly if extra demand creates jobs and incomes [1]. Producers lose if they buy imported inputs, because costs rise [1]. Consumers lose: imports and holidays abroad cost more, which can raise prices [1]. It depends on elasticity of demand for exports, the share of imported inputs, the size and length of the fall, and whether rivals’ currencies also fall [2]. Judgement: it favours exporters more than consumers, so “both” is true only in part, as consumers who buy imports lose [2]. [8] Examiner insight: an answer that sets out gains and losses for each group, then reaches a supported conclusion, is better placed than one that only lists effects.

11. Benefits: producers reach larger markets and cut costs by importing inputs, and consumers gain lower prices and more choice [1]; workers in export industries gain jobs [1]. Costs: low-skilled workers may lose jobs or face lower wages as production moves abroad [1]; some local producers close [1]. Sustainability: economic, if retraining lets workers move into new industries [1]; social, because job losses can harm communities [1]; environmental, because longer transport adds emissions [1]. Judgement: the gains are widespread but the costs fall on particular groups and places, so the balance depends on the pace of change and the support given [1]. [8] Examiner insight: name each group and its gain or loss, and bring sustainability in as a test of the answer, not as a separate list.

12. Benefits: investment and technology arrive with multinational firms [1]; workers may earn more than in farming, and consumers gain cheaper goods [1]. Costs: local producers face strong competition and may rely on a few exports [1]; low pay, long hours or poor safety [1]. Sustainability: economic, through dependence on one export or a foreign employer [1]; social, through urban crowding or inequality [1]; environmental, through pollution and resource use [1]. Judgement: the outcome depends on regulation, the types of jobs created and time, so the balance is favourable only where standards are enforced [1]. [8] Examiner insight: keep evaluation specific to a less developed country, with a reason for each claim, and finish with a judgement on balance.

Where marks are usually lost

• Multiplying instead of dividing when converting into pounds.
• Quoting a percentage change without showing the calculation.
• Describing a trend without figures from the table.
• Saying a depreciation always helps without considering imports and elasticity.
• Listing development indicators without saying what each shows.
• Using GDP per capita as if it measured fairness.
• Writing a one-sided answer to an evaluation question.
• Treating sustainability as an add-on and not applying it to the points made.

Next steps

• Recap with the revision notes and the study guide.
• Tick off coverage on the checklist and see the hub.
• Take one of the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

OCR GCSE (9-1) Economics (J205), version 2.0 (June 2026), first assessment 2019, published by OCR.