Economic integration Paper 1| IBDP Economics HL |

IBDP Economics HL – The global economy – Economic integration -Paper 1 Exam Style Practice Questions

Exam Style Questions..

IBDP Economic SL- All Topics

Question

Using real-world examples, evaluate the decision of a country to remain a member of a trading bloc.

▶️Answer/Explanation

Answers may include:

Terminology: Trading bloc.
Diagrams: AD/AS diagram to illustrate growth. Economies of scale to indicate falling costs with increased market size. Trade diagram illustrating the removal of restrictions to trade.
Theory: Explanation of the impacts of a trading bloc on the economy in terms of employment, economic growth, trade creation, trade diversion and economies of scale.
Synthesis (evaluate): Advantages including trade creation, greater access to markets, economies of scale. Freedom of movement of labour and greater employment opportunities, stability and cooperation, increased economic growth, greater consumer choice, increased competition, lower prices, improved efficiency. Disadvantages including trade diversion, impact on sovereignty, the effect on multilateral trade negotiations such as those of the WTO. Unemployment in less competitive member states. Candidates who cite the EU as an example may also consider arguments pertaining to membership in the Eurozone.
Example(s): A relevant real-world example(s) of a country who is a member of a given trading bloc.

Question

Explain how a free trade area is different from a common market.

▶️Answer/Explanation

Answers may include:

Terminology: Free trade area, common market.
Diagrams: Candidates may answer the question without the use of diagrams, but they might decide to devise a diagram using for example a Venn diagram to help explain the difference.
Theory: An explanation that a free trade area is an agreement between two or more countries to reduce or remove tariffs and other barriers to trade between them. A common market is a level of economic integration in which countries share common external barriers to trade. Between members there are no controls on the movement of goods and services and there is freedom of movement for the factors of production.

Question

Using real-world examples, discuss the advantages and disadvantages for a country of being a member of a trading bloc.

▶️Answer/Explanation

Answers may include:

Terminology: trading bloc
Explanation: of possible advantages such as trade creation, access to markets and greater potential for economies of scale; free movement of labour and greater employment possibilities, stronger bargaining power in multilateral negotiations, greater political stability and cooperation
Diagram: use of a PPC diagram, a tariff diagram or any other relevant diagram
Synthesis (discuss): the potential disadvantages, if advantages discussed first, e.g. trade diversion, loss of sovereignty, challenge to multilateral trading negotiations; or a discussion of the potential advantages if the other way round; overall assessment
Examples: real-world examples of countries that have become members of a trading bloc or left a trading bloc.