OxfordAQA International GCSE Economics: Why countries trade, free trade and exchange rates (9214) – 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 3.2.4.1 and 3.2.4.2 of the OxfordAQA International GCSE Economics (9214) specification, for exams from May/June 2025 onwards. All countries, currencies and figures are invented. Read the study guide or the revision notes first. See also the course hub and the checklist.

Questions

1. State the meaning of exports and of imports, and give one example of a service export. [3]

2. Country D has a GDP of 200 billion, exports of 70 billion and imports of 64 billion. (a) Calculate exports as a percentage of GDP. [1] (b) Calculate exports plus imports as a percentage of GDP. [1] (c) Explain why a country with a high figure in (b) is more exposed to events abroad. [2]

3. Explain two consumer benefits of international trade. [4]

4. In a day, Country X can produce either 12 bikes or 24 helmets, and Country Y either 10 bikes or 40 helmets. At present each country uses half of its day on each good. (a) Work out what one bike costs, in helmets, in each country. [2] (b) State which good each country should specialise in, and why. [2] (c) Calculate the extra output of each good from specialisation. [2]

5. A firm has fixed costs of 60,000 and variable costs of 3 per unit. It sells 10,000 units at home and could sell 25,000 if it exported. (a) Calculate average cost at each output. [2] (b) Explain why exporting lowers average cost. [2]

6. Country M sends 35% of its exports to Country N. Sales to N fall by 20% because of a recession there. (a) Calculate the fall in M’s total exports, assuming other sales are unchanged. [2] (b) Explain one benefit of global interdependence. [2]

7. “Free trade is always better for a country than protecting its industries.” Evaluate this statement. [8]

8. Country A and Country B form a free-trade agreement. Before it, A paid a 6% tariff on machines that cost 8,000 each. (a) Explain what a free-trade agreement is. [2] (b) Calculate the price of a machine before the agreement, and the saving for a firm buying 40 machines. [3] (c) Explain one drawback of the agreement for Country A. [2]

9. The currency of Country A is the tano. The table shows the market for tano against the ruvi.

Ruvi per tano	Quantity demanded (million)	Quantity supplied (million)
1.20	40	100
1.10	55	85
1.00	70	70
0.90	85	55
0.80	100	40

(a) State the equilibrium exchange rate. [1] (b) Explain why the quantity of tano demanded rises as the rate falls. [2] (c) Foreign demand for Country A’s exports rises, adding 30 million to demand at every rate. State the new equilibrium rate and the percentage by which the tano has moved. [3]

10. Explain two reasons why a currency might depreciate. [4]

11. The kelm falls from 2.5 to 2.0 zorn per kelm. (a) Work out the percentage fall in the kelm’s value. [1] (b) A machine part from the zorn country costs 500 zorn. Calculate its price in kelm before and after the fall. [2] (c) An exporter sells 12,000 units at a fixed price of 50 zorn. Calculate its revenue in kelm before and after the fall. [2] (d) State one reason why the exporter’s profit may rise by less than its revenue. [1]

12. “A fall in the value of Country A’s currency benefits its economy.” Evaluate this statement. [8]

Answers

1. Exports are goods and services that a country sells to buyers abroad [1]. Imports are goods and services that its residents and firms buy from abroad [1]. Example: foreign tourists staying at a hotel in the country, or a bank selling services abroad [1]. [3] Examiner insight: Definitions are stronger when they name both goods and services and say which country is buying or selling. An example of a physical good does not answer a question that asks for a service.

2. (a) 70/200 x 100 = 35% [1]. (b) (70 + 64)/200 x 100 = 67% [1]. (c) A large share of output depends on trade [1], so a fall in foreign demand or a rise in import prices has a bigger effect on income and jobs [1]. [4] Examiner insight: Show the sum before the answer. A bare “67%” gives the reader nothing to follow if the arithmetic has slipped, while a short line of working makes the method visible.

3. First benefit: imports add competition [1], which pushes prices down and raises quality [1]. Second benefit: trade widens choice [1], so consumers can buy goods the country cannot make, such as tropical fruit in a cold climate [1]. [4] Examiner insight: Each benefit needs a reason, not only a name. “Lower prices” earns less than “lower prices because foreign rivals force local firms to cut costs”.

4. (a) Country X: 24 helmets/12 bikes = 2 helmets per bike [1]. Country Y: 40/10 = 4 helmets per bike [1]. (b) Country X specialises in bikes, because it gives up fewer helmets per bike [1]. Country Y specialises in helmets, because it gives up fewer bikes per helmet (0.25 against 0.5) [1]. (c) Before: X makes 6 bikes and 12 helmets, Y makes 5 bikes and 20 helmets, so the totals are 11 bikes and 32 helmets. After: 12 bikes and 40 helmets. Gains: 1 bike [1] and 8 helmets [1]. [6] Examiner insight: Opportunity cost must be stated per unit of one good, with the other good named. Quoting “2” with no unit is unclear.

5. (a) At 10,000 units: 3 + 60,000/10,000 = 9 [1]. At 25,000 units: 3 + 60,000/25,000 = 5.4 [1]. (b) Fixed costs do not change with output [1], so spread over more units they add less to each unit’s cost [1]. [4] Examiner insight: Explanations of economies of scale gain from naming which cost is spread. Saying only “it is cheaper to make more” repeats the question.

6. (a) 0.35 x 20% [1] = 7% [1]. (b) Interdependence gives access to goods and markets that a country lacks [1], so firms can sell more and households can buy a wider range, for example imported inputs the country cannot produce [1]. [4] Examiner insight: “Calculate” questions on shares want the multiplication shown. The common slip is to quote the 20% as the fall in all exports.

7. For free trade: lower prices and more choice for consumers [1], because foreign competition forces domestic firms to cut costs [1]. Also specialisation raises total output [1]. For protection: infant industries may need temporary shelter until they grow large enough to compete [1], and a sudden flood of imports can destroy jobs that take years to replace [1]. Judgement: the statement is too strong because “always” ignores cases such as new industries or short-term unemployment [1]. Free trade is usually better in the long run when workers can retrain and the protected firm would otherwise stay inefficient [1]. It depends on how large and how lasting the job losses are [1]. [8] Examiner insight: Strong answers weigh both sides and reach a conclusion that responds to the word “always”. An answer listing four points with no judgement stays descriptive.

8. (a) An agreement between two or more countries [1] to remove tariffs and other barriers on trade between them [1]. (b) Price with tariff: 8,000 x 1.06 = 8,480 [1]. Tariff per machine: 8,000 x 0.06 = 480 [1]. Saving for 40 machines: 40 x 480 = 19,200 [1]. (c) Domestic machine makers in A now face cheaper imports from B [1], so some may lose sales and jobs [1]. [7] Examiner insight: A drawback must be a consequence for Country A, with a reason. A general comment such as “it is not fair” does not show how A is affected.

9. (a) 1.00 ruvi per tano [1]. (b) A lower rate makes Country A’s goods cheaper for foreign buyers [1], so they buy more and need more tano [1]. (c) New demand is 70, 85, 100, 115, 130 [1]. It equals supply at 1.10 (85 = 85) [1]. Change = (1.10 - 1.00)/1.00 x 100 = 10% appreciation [1]. [6] Examiner insight: When asked to find a new equilibrium, show the shifted column. Answers that guess the new rate without working are hard to follow if wrong.

10. First reason: interest rates fall at home [1], so foreign savers move funds elsewhere, which lowers demand for the currency [1]. Second reason: residents buy more imports [1], which means more of the currency is sold to pay for them, raising supply [1]. [4] Examiner insight: Each reason should name the curve that shifts and in which direction. Saying “people lose confidence” without linking it to demand or supply is incomplete.

11. (a) (2.0 - 2.5)/2.5 x 100 = -20% [1]. (b) Before: 500/2.5 = 200 kelm [1]. After: 500/2.0 = 250 kelm [1]. (c) Revenue in zorn = 12,000 x 50 = 600,000. Before: 600,000/2.5 = 240,000 kelm [1]. After: 600,000/2.0 = 300,000 kelm [1]. (d) The firm may use imported parts, whose cost in kelm rises [1]. [6] Examiner insight: Check which currency the rate is quoted in before dividing or multiplying. The rate here is zorn per kelm, so zorn amounts are divided by it.

12. Benefits: exports become cheaper abroad [1], so volumes may rise, helping exporters and jobs [1]. Local goods become cheaper than imports, which helps firms facing import competition [1]. Costs: imports become dearer [1], so households face a higher cost of living and firms using imported materials face higher costs [1]. Judgement: the gain depends on how responsive foreign demand is to price [1] and on how much the economy relies on imported inputs [1]. Over a longer period, firms may adjust and the effect may fade, so the overall effect is positive only if demand is elastic enough to outweigh higher costs [1]. [8] Examiner insight: Strong answers say who gains and who loses, then judge using elasticity or time. Stating only that exports rise treats a depreciation as simply good.

Where marks are usually lost

• Dividing by the rate when the answer needs multiplying, because the currency pair was not read carefully.
• Dividing a change by the new figure rather than the starting one.
• Giving a benefit of trade with no reason, such as “more choice” and nothing more.
• Treating all exports as hit by a fall in sales to one partner.
• Saying depreciation makes imports cheaper.
• Drawing or describing currency demand as upward sloping.
• Describing a free-trade agreement as free trade with every country.
• Finishing an evaluation by repeating points without reaching a judgement.

Next steps

• Recap: revision notes and study guide
• Course pages: hub and checklist
• Related practice: markets practice
• Find gaps with the free 10-minute diagnostics
• Book a free trial class

Official syllabus

These questions follow the OxfordAQA International GCSE Economics (9214) specification, version 1.0, for exams from May/June 2025 onwards, published by OxfordAQA.