O-LevelCommerceGlobal trade7100/21 · Oct/Nov 2013 · Q720 Marks

Some car companies in the international motor industry manufacture cars in countries where tariffs and quotas exist.

(a)(i)Explain what are meant by: tariffs[2]
(a)(ii)Explain what are meant by: quotas.[2]
(b)(i)What effect will the introduction of tariffs and quotas have on: the import of foreign cars into a country[2]
(b)(ii)What effect will the introduction of tariffs and quotas have on: domestic industries within that country?[2]
(c)(i)Explain how the following will affect the Balance of Payments of a country: a company manufacturing cars there for export[2]
(c)(ii)Explain how the following will affect the Balance of Payments of a country: an importer of car parts[2]
(c)(iii)Explain how the following will affect the Balance of Payments of a country: a bank in that country providing services to customers in other countries.[2]
(d)'The growth of the global economy makes countries more dependent on one another.' Is this true? Give reasons for your opinion.[6]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2013). The mark or mark type is shown in brackets.

[2] taxes/on goods entering a country
[2] limits on the quantity/of particular goods entering a country
[2] fewer cars will be imported
imported cars will be more expensive
so there will be less demand for these cars
any other relevant point
[2] there may be increased demand for home-produced cars
so the car industry within the country will be stimulated
there may be no effect
industries related to car manufacturing e.g. component factories may be stimulated
any other relevant point
[2] receipts from the sale of exported cars will add to total exported goods and so contribute to the Balance of Payments
[2] payments from the purchase of imported car components will add to the total of imported goods
and may lead to the country importing more than it is exporting and so
lead to a deficit on the Balance of Payments
[2] banking services are invisible exports
and will contribute to the Balance of Payments
[6] Level 2 (4-6 marks)
Has discussed the statement and has given a reasoned opinion.
Many countries are dependent on other countries and so they trade together. They may lack raw materials or sources of fuel and so they import these from other countries. They may produce manufactured goods that other countries lack and so they export them to these countries. They may provide services such as banking and finance or be well known for transport services and sell these to businesses in other countries.
The development of commercial activities such communication and transport has speeded up transactions and widened markets leading to the growth of the global economy. The impact on commercial activity of computer technology, especially the use of the Internet and email, had made it far easier to keep in contact with other businesses in other countries. The development of electronic methods of payment has made it easier and safer to make payment for goods and services bought in other countries. The growth of multinational companies with branches in many countries, has meant that more goods are available to satisfy increasing global demand.
It is certainly true that as the global economy grows, many countries concentrate on what they are best at producing the concept of comparative advantage and specialise in particular industries. They, therefore, become dependent on other countries for what they do not wish to produce or cannot produce in order to satisfy their consumer needs and wants.
Level 1 (1-3 marks)
Has commented on the statement with/without an opinion.
Many countries rely on other countries. Singapore relies on Australia for some of its food. The Maldives relies on the Middle East for its oil. China supplies many countries with manufactured goods. This is the global economy.