1 What Would Limit the Globalisation Process Among Nations

1 What would limit the globalisation process among nations?

(A) Increases in the number of free trade agreements (B) Increases in the flow of direct foreign investment (C) Increases in the volume of trade flows (D) Increases in protection levels

5 The diagram shows the effects of a tariff. The curve SS is the supply from domestic producers and the curve DD is the demand from domestic consumers. The duty free price is $15 and the government imposed tariff is $5.

Which statement is correct?

(A) The government receives $100 in tariff revenue and domestic production of this product increases. (B) The government receives $100 in tariff revenue and domestic production of this product decreases. (C) The government receives $50 in tariff revenue and domestic production of this product increases. (D) The government receives $50 in tariff revenue and domestic production of this product decreases.

15 Which statement best illustrates the difference between the effects of a tariff on imports and a subsidy on domestic production?

(A) A tariff increases the price of the imported good and a subsidy may decrease the supply of the domestic good. (B) A tariff increases the price of the imported good and a subsidy may increase the supply of the domestic good. (C) A tariff decreases the price of the imported good and a subsidy may increase the supply of the domestic good. (D) A tariff decreases the price of the imported good and a subsidy may decrease the supply of the domestic good. 4 Which of the following indicates international convergence?

(A) Increasing similarity of economic systems (B) Reductions in the international mobility of labour (C) Dismantling of internationally-based trade agreements (D) Widening gaps between developed and developing economies

7 The diagram shows the impact of a change in the quota for imported cars.

According to the diagram, what are the effects of a movement in the supply curve from SS to S1S1? 1 (A) The quota has increased and local car producers face more competition. (B) The quota has increased and local car producers face less competition. (C) The quota has decreased and local car producers face more competition. (D) The quota has decreased and local car producers face less competition.

18 What would decrease as a result of an improvement in the international business cycle? 1 (A) Unemployment (B) Foreign investment (C) Global trade (D) Export receipts

3 Which of the following describes an effect of globalisation?

(A) There has been a greater divergence in world economic systems. (B) There has been an increase in the inequality of income distribution in developing economies. (C) There has been an increasing trend towards regulation of labour, financial and product markets. (D) The newly industrialised economies of the world have enjoyed economic growth, but no increase in international trade.

6 How does the impact of a tariff differ from that of an import quota?

(A) A tariff disadvantages consumers, while a quota does not. (B) A tariff generates tax revenue to the government, while a quota does not. (C) A tariff encourages increased domestic production, while a quota does not. (D) A tariff affects the domestic price of a commodity, while a quota does not.

2 Which of the following is a likely effect of a subsidy?

(A) The price of exported items will rise. (B) Resource allocation will be more efficient. (C) The supply from local producers will increase. (D) Inflation will increase due to more expensive imports.

18 The diagram illustrates the effect of a tariff.

Which of the following represents the effect of this tariff on the economy?

(A) The domestic price would increase to the equilibrium price (0Pe). (B) Domestic production would increase from 0Q1 to 0Q2. (C) Import volumes would increase from 0Q2 to 0Q3. (D) Government revenue would be equal to the world price (0Pw).

19 What is an advantage of free trade? (A) Nations are free to take measures to protect all domestic industries. (B) Nations attempt to become self-sufficient to satisfy domestic wants. (C) Nations are able to specialise and as a result produce more output. (D) Nations can prevent cheap imports being dumped on domestic markets. 1 Which of the following defines Gross World Product?

(A) Increased integration between different countries and economies (B) The total global output of goods and services by all economies (C) The sum of the interactions between the economies of individual countries (D) The final output of goods and services produced by developing economies

10 What is the likely impact of a decrease in the general level of tariffs in Australia? (A) Greater advantages for Australian producers in Australian markets (B) Reduced advantages for Australian producers in overseas markets (C) Greater advantages for overseas producers in Australian markets (D) Reduced advantages for overseas producers in overseas markets

18 The diagram shows the market for imported shoes.

According to the diagram, what is the effect of a movement in the quota from S to S1? (A) The quota increases and the domestic price falls. (B) The quota decreases and the domestic price rises. (C) The quota increases and the domestic price rises. (D) The quota decreases and the domestic price falls.

1 (a) Outline TWO economic indicators of the globalisation process. 2

1 (b) Explain why globalisation has increased international financial flows. 3 Question 21 (10 marks)

The diagram illustrates the effect of a tariff on the product of a particular industry. The curve SS is the supply from domestic producers, and the curve DD is the demand from domestic consumers.

(a) What is the domestic market price for this product after the imposition of this tariff? 1

(b) Calculate the amount of government revenue raised from this tariff. 1

(c) Outline THREE methods of protection, other than tariffs, for domestic producers. 3

(d) Explain the economic effects of a reduction in the general level of protection for the Australian economy. 5 Question 21 (10 marks)

The diagram shows the world market for a commodity after the introduction of a subsidy by a country which is a major world producer.

(a) Explain why the supply curve shifts from S1 to S2 after the subsidy has been introduced. 2

(b) With reference to the diagram, analyse the impact of the subsidy on producers in countries where the subsidy has not been introduced. 4

(c) Explain TWO benefits associated with a reduction in global protectionist policies. 4