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O-LevelEconomicsInternational trade and globalisation2281/22 · May/June 2019 · Q320 Marks

There was a global surplus of steel in 2017. In mid-2017, the US government considered imposing tariffs on steel imports to protect its declining steel industry. Cheap imports from other countries were reducing employment in the US steel industry. The pattern of US employment was also being affected by improvements in education.

  1. (a)Identify two methods of trade protection other than tariffs.[2]
  2. (b)Explain how market forces will eliminate a surplus and a shortage.[4]
  3. (c)Analyse how improvements in education can affect the pattern of employment.[6]
  4. (d)Discuss whether or not the imposition of import tariffs by a country will reduce its unemployment.[8]

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

  1. [2] quotas; embargoes; voluntary export restraint; red tape / bureaucracy / artificially high standards; subsidies
  2. [4] A surplus will be eliminated by a fall in price (1) demand will rise / supply will fall (1). A shortage will be eliminated by a rise in price (1) demand will fall / supply will rise (1).
  3. [6] May be more skilled workers (1) increase qualifications (1) workers may seek better paid jobs (1) jobs with better working conditions (1). There is likely to be a reduction in primary sector employment (1) an increase in secondary / tertiary sector employment (1). May be an increase in women in employment (1) if girls benefit from improvements in education (1). May increase employment of teachers (1) if e.g. class sizes are reduced (1). May encourage an increase in migrant workers (1) attracted by better education for their children (1).
  4. [8] Up to 5 marks for why it might: Import tariffs may raise the price of imports (1) demand for imports may fall (1) consumers may switch to domestic products (1) firms may increase output (1) take on more workers (1). Tariffs can protect infant industries (1) allow them to grow (1) and employ more workers (1). Tariffs can protect declining industries (1) reduce structural unemployment (1). Tax revenue may increase (1) example of higher government spending that could reduce unemployment (1). Up to 5 marks for why it might not: Other countries may retaliate (1) imposing tariffs on this country's exports (1) employment in the export industries may fall (1). Tariffs on imported raw materials (1) will increase costs of production (1) this may lead to higher prices of domestic products (1) causing a fall in demand (1). Imports may not have domestic substitutes (1) price of imports may still be lower (1) so consumers may continue to buy imports (1) demand for imports may be price inelastic (1).

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About this question

Topic
International trade and globalisation, O-Level Economics (syllabus 2281). Structured question, 20 marks.
Source
O-Level Economics, May/June 2019 Paper 2 Variant 2, question 3.

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