Globalisation and trade restrictions: five questions to try now
Real past-paper questions, the answer key from the mark scheme, and the explanation that goes with it. No account needed to answer them.
Question 1
A country has decided that it wants to increase free trade with its trading partners. Which measure would help it achieve this objective?
Answer: A.
The correct answer is A: a higher quota on imported cars.
A quota is a limit on the quantity of imports permitted. Raising that limit allows more foreign cars in, which is a relaxation of protection and therefore a move towards freer trade. Read the direction, not just the instrument: a bigger quota is a smaller restriction.
Why the other options are wrong:
A quota is a limit on the quantity of imports permitted. Raising that limit allows more foreign cars in, which is a relaxation of protection and therefore a move towards freer trade. Read the direction, not just the instrument: a bigger quota is a smaller restriction.
Why the other options are wrong:
- B, a subsidy to domestic car producers, lowers their costs so they can undercut imports. It is a protectionist measure, and one that trading partners regard as unfair competition.
- C, an embargo on foreign cars, is the most severe barrier of all, a complete ban. It is the opposite of free trade.
- D, higher tariffs on imported goods, taxes imports more heavily, raising their price and reducing the quantity bought.
Question 2
A government imposes a limit of 2 million on the number of smartphones imported into the
country.
Which term is given to this limitation?
Answer: C.
The correct answer is C: quota.
A quota is a limit on the quantity of a good that may be imported over a period. Capping smartphone imports at 2 million units is exactly that: a numerical ceiling on volume. Because the government sets the quantity directly, the effect on import numbers is predictable, unlike a tariff whose effect depends on how buyers respond to a higher price. Restricting supply also raises the domestic price, so domestic producers gain sales at better margins while consumers lose on both count.
Why the other options are wrong:
A quota is a limit on the quantity of a good that may be imported over a period. Capping smartphone imports at 2 million units is exactly that: a numerical ceiling on volume. Because the government sets the quantity directly, the effect on import numbers is predictable, unlike a tariff whose effect depends on how buyers respond to a higher price. Restricting supply also raises the domestic price, so domestic producers gain sales at better margins while consumers lose on both count.
Why the other options are wrong:
- A, a ban, and B, an embargo, both mean a complete prohibition, zero imports permitted. Here 2 million units are allowed, so trade continues.
- D, a tariff, is a tax on imports. It raises the price rather than capping the quantity, and it generates revenue for the government, which a quota does not.
Question 3
Country X produces cars and also imports cars. Which group is least likely to benefit from the introduction of an import tariff on cars?
Answer: A.
The correct answer is A: consumers of cars in country X.
A tariff on imported cars raises their price, so consumers pay more for imported vehicles and face a narrower choice. Domestic producers, now sheltered from competition, can raise their prices too, so even buyers of home-produced cars are worse off. Consumers lose on both price and variety, and they are the group that bears the cost of the policy.
Why the other options do benefit:
A tariff on imported cars raises their price, so consumers pay more for imported vehicles and face a narrower choice. Domestic producers, now sheltered from competition, can raise their prices too, so even buyers of home-produced cars are worse off. Consumers lose on both price and variety, and they are the group that bears the cost of the policy.
Why the other options do benefit:
- B, producers of cars in country X, gain most directly. Dearer imports shift demand towards their vehicles, so they sell more at higher prices.
- C, the government of country X, collects tariff revenue on the imports that still arrive.
- D, workers making cars in country X, benefit from the increase in domestic production. More output means more jobs and stronger wage bargaining power in the protected industry.
Question 4
Which method of trade protection would enable domestic firms to lower their prices and undercut the price of imported goods?
Answer: A.
The correct answer is A: a subsidy.
A subsidy is a payment to domestic producers that lowers their costs of production. With lower costs they can profitably charge less, so they are able to undercut imported goods on price. This is the distinctive feature the question asks for: the domestic price actually falls, whereas every other protectionist instrument works by pushing the price of imports up.
Why the other options are wrong:
A subsidy is a payment to domestic producers that lowers their costs of production. With lower costs they can profitably charge less, so they are able to undercut imported goods on price. This is the distinctive feature the question asks for: the domestic price actually falls, whereas every other protectionist instrument works by pushing the price of imports up.
Why the other options are wrong:
- B, a tariff, taxes imports so that their price rises. Domestic goods become relatively cheaper, but only because the imported alternative has become dearer, the domestic price does not fall, and consumers pay more overall.
- C, an embargo, bans imports outright. With foreign competition removed entirely, domestic producers can raise prices, not lower them.
- D, an import quota, limits the quantity of imports. Restricted supply pushes the market price up.
Question 5
Which protectionist measure would be most suitable for a government to use to support the growth in exports of an industry?
Answer: C.
The correct answer is C: subsidy.
The question asks specifically about supporting the growth of exports, and a subsidy is the only instrument in the list that does that. It lowers domestic producers' costs of production, so they can charge less in foreign markets and win sales from overseas competitors. Export volumes and revenue rise.
Why the other options are wrong:
- A, an embargo, B, a quota, and D, a tariff, are all restrictions on imports. They may reduce what the country buys from abroad and so protect domestic producers in the home market, but none of them makes the country's goods any cheaper or more attractive to foreign buyers.
In fact all three are likely to harm exports. Trading partners commonly retaliate with barriers of their own, closing off export markets. And where the restricted imports are raw materials or components, domestic manufacturers face higher input costs, which makes their finished exports less competitive.
The distinction the question rewards is between instruments that work on the import side and instruments that work on the export side. Subsidies act on domestic costs, which is why they reach both, and why trading partners treat export subsidies as unfair competition.
The question asks specifically about supporting the growth of exports, and a subsidy is the only instrument in the list that does that. It lowers domestic producers' costs of production, so they can charge less in foreign markets and win sales from overseas competitors. Export volumes and revenue rise.
Why the other options are wrong:
- A, an embargo, B, a quota, and D, a tariff, are all restrictions on imports. They may reduce what the country buys from abroad and so protect domestic producers in the home market, but none of them makes the country's goods any cheaper or more attractive to foreign buyers.
In fact all three are likely to harm exports. Trading partners commonly retaliate with barriers of their own, closing off export markets. And where the restricted imports are raw materials or components, domestic manufacturers face higher input costs, which makes their finished exports less competitive.
The distinction the question rewards is between instruments that work on the import side and instruments that work on the export side. Subsidies act on domestic costs, which is why they reach both, and why trading partners treat export subsidies as unfair competition.
What this practice covers
These questions are drawn from past Cambridge IGCSE papers and filtered to globalisation and trade restrictions. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
What examiners see students get wrong here
These are the errors that cost marks on globalisation and trade restrictions, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Confusing a tariff (a tax) with a quota (a quantity limit).
- Saying protection saves jobs without mentioning jobs lost through retaliation and higher input costs.
- Forgetting that consumers pay for protection.
- Listing MNC benefits without the drawbacks, especially profit repatriation.
- Treating globalisation as a synonym for free trade, globalisation also covers investment, migration and technology flows.
- Giving the infant industry argument without noting that protection is meant to be temporary.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Globalisation and trade restrictions revision notes.