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International trade · Part 2 of 4
9 exam-style questions with model answers, plus 13 quick multi-choice questions — every question on this part of the standard, grouped by the 3 pages of notes they come from.
Write a full answer before you reveal the model one. That comparison is where the learning happens.
Explain why the world price in the price taker model is drawn as a horizontal line.
The world price of lamb falls. New Zealand is a price taker in the world lamb market.
Explain in detail how the lower world price affects the quantity of exports and the amount of export receipts. Refer to the price taker model in your answer.
The world price of a major New Zealand export good falls sharply.
Compare and contrast the impact of this on New Zealand producers of that good and New Zealand consumers of it, and give a reasoned judgement about the overall effect on New Zealand. Refer to the price taker model in your answer.
On a two-country model, explain what the trade price (Pt) represents and why it sits between the two countries' original domestic prices.
New Zealand exports wool to an overseas country. New Zealand then reduces its national sheep flock significantly.
Explain in detail the impact on the level of exports and on export receipts for New Zealand wool. Refer to the two-country model in your answer.
A free trade agreement removes the tariff on New Zealand exports of a horticultural product to a large overseas market. New Zealand exports of that product rise sharply.
Compare and contrast the impact of this on New Zealand growers of that product and on New Zealand consumers of that product, and explain the impact on New Zealand growers of other horticultural products. Refer to the two-country model in your answer.
New Zealand has a deficit on the balance of goods and services. The world price of a major export rises.
Explain how this will affect the deficit.
A record harvest allows New Zealand to export significantly more of a horticultural product, at an unchanged world price.
Explain in detail the impact on export receipts and on the balance on goods and services. Refer to the price taker model in your answer.
New Zealand experiences a period of strong economic growth. At the same time, growth slows in New Zealand's major export markets.
Compare and contrast the effect of these two developments on New Zealand's balance on goods and services, and give a reasoned judgement about the overall effect on the New Zealand economy.