Practise distinguishing free-trade areas, customs unions and common markets, then evaluate monetary integration, labour mobility and sovereignty in HL questions.
Study the extract and data below and answer the questions that follow.
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Define the term bilateral trade agreements indicated in bold in the text (paragraph (1)).
1 Vague definition.
The idea that it (any one of the following is sufficient):
- is essential facilities (capital) and services such as roads, airports, sewage treatment, water systems, railways, telephone and utilities
- reduces the cost / increases efficiency of economic activity
- is usually supplied by the government
- is necessary for economic activity.
2 Accurate definition.
An explanation that it (any two of the following is sufficient):
- is essential facilities (capital) and services such as roads, airports, sewage treatment, water systems, railways, telephone and utilities
- reduces the cost / increases efficiency of economic activity
- is usually supplied by the government
- is necessary for economic activity.
Explain how a free trade area is different from a common market.
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.
Assessment Criteria
Marks ..... Level descriptor
0:
- The work does not reach a standard described by the descriptors below.
1-2:
- The response indicates little understanding of the specific demands of the question.
- Economic theory is stated but it is not relevant.
- Economic terms are stated but they are not relevant.
3-4:
- The response indicates some understanding of the specific demands of the question.
- Relevant economic theory is described.
- Some relevant economic terms are included.
5-6:
- The response indicates understanding of the specific demands of the question, but these demands are only partially addressed.
- Relevant economic theory is partly explained.
- Some relevant economic terms are used appropriately.
- Where appropriate, relevant diagram(s) are included.
7-8:
- The specific demands of the question are understood and addressed.
- Relevant economic theory is explained.
- Relevant economic terms are used mostly appropriately.
- Where appropriate, relevant diagram(s) are included and explained.
9-10:
- The specific demands of the question are understood and addressed.
- Relevant economic theory is fully explained.
- Relevant economic terms are used appropriately throughout the response.
- Where appropriate, relevant diagram(s) are included and fully explained.
Using real-world examples, evaluate the decision of a country to remain a member of a trading bloc.
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.
Assessment Criteria
Marks ..... Level descriptor
0:
- The work does not reach a standard described by the descriptors below.
1-3:
- The response indicates little understanding of the specific demands of the question.
- Economic theory is stated but it is not relevant.
- Economic terms are stated but they are not relevant.
- The response contains no evidence of synthesis or evaluation.
- A real-world example(s) is identified but it is irrelevant.
4-6:
- The response indicates some understanding of the specific demands of the question.
- Relevant economic theory is described.
- Some relevant economic terms are included.
- The response contains evidence of superficial synthesis or evaluation.
- A relevant real-world example(s) is identified.
7-9:
- The response indicates understanding of the specific demands of the question, but these demands are only partially addressed.
- Relevant economic theory is partly explained.
- Some relevant economic terms are used appropriately.
- Where appropriate, relevant diagram(s) are included.
- The response contains evidence of appropriate synthesis or evaluation but lacks balance.
- A relevant real-world example(s) is identified and partly developed in the context of the question.
10-12:
- The specific demands of the question are understood and addressed.
- Relevant economic theory is explained.
- Relevant economic terms are used mostly appropriately.
- Where appropriate, relevant diagram(s) are included and explained.
- The response contains evidence of appropriate synthesis or evaluation that is mostly balanced.
- A relevant real-world example(s) is identified and developed in the context of the question.
13-15:
- The specific demands of the question are understood and addressed.
- Relevant economic theory is fully explained.
- Relevant economic terms are used appropriately throughout the response.
- Where appropriate, relevant diagram(s) are included and fully explained.
- The response contains evidence of effective and balanced synthesis or evaluation.
- A relevant real-world example(s) is identified and fully developed to support the argument.