Download 90795 AssSch.pps

90795 Describe international trade and
its causes and effects using
economic models
90795 Trade
(a) Classify the following items by placing them in the most appropriate
column in the table.
NZ Mainly Exports
NZ Mainly Imports
Apples
Aircraft
beef
Clothing
milk powder
Motor vehicles
A
M
E
4/6 correct
(b) State New Zealand’s largest trading partner by dollar value.
Australia
(c) State three other countries that are
included in both our top 5
USA, China, Japan
A
(b) correct
and
2 from (c)
M
E
90795 Trade
(a) Which country has the absolute advantage in the production of Vans
and Milk Powder?
Ac
Mc
E
Jeland
correct
(b) Complete these sentences:
Jeland – milk powder
Moland – vans
both correct
(c) Explain your answers to question (b) referring to data shown on the
graphs.
Ac
Mc
E
Jeland can produce milk powder at a lower
opportunity cost (0.1 van) than can Moland
(0.2 van)
Moland can produce vans at a lower
opportunity cost (5 mp) than can Jeland
(10mp)
One
country
explained
including
mention of
opportunity
cost.
Both
countries
explained
including
mention of
opportunity
cost and a
calculation.
90795 Trade
Ae
Me
E
(d) Assume each country was to specialise in the production of the good
One graph
Both graphs
they have a comparative advantage in. Show
the
new
consumption
correct with
correct with
point on EACH country’s graph if the tradeexports
dealand
between
the countries
exports
and
is 3000 tonnes of milk powder for 400 vans.
Fully label imports
any exports X
imports
correctly
correctly
and imports M on each graph.
labelled.
Moland
1000
1000
800
800
X
Vans
Vans
Jeland
labelled.
600
400
M 200
600
400
200
0
0
0
2000
4000
6000
8000
Milk Powder (tonnes)
X
10000
0
2000
4000
6000
8000
M Milk Powder (tonnes)
10000
90795 Trade
(e) Explain why this trading combination is beneficial for both countries.
This trading combination places both
countries outside their PPC. Trade has
allowed them to consume a previously
unobtainable output given a constant state of
resources and technology.
Ae
Me
E
Outside
PPC so now
better off.
A
M
E
MC from (c)
ME from (d)
and ME
from (e).
90795 Trade
(a) Show the effect of this increase in the world price on the graph below
(b) Label
(i) the new quantity demanded by NZ consumers as QD
(ii) the new quantity produced by NZ producers as QS
(iii) the new quantity exported as X.
Milk
Solids
P($)
Ae
SNZ
10-
X
98-
DW’
765-
DWorld
4321DNZ
0
QD
QS
Quantity
Price
increases to
$7.30.
Me
Achieved
plus QD,
QS, X
correctly
labelled.
E
90795 Trade
(c) Explain the effect of the increased world price on New Zealand
Producers and New Zealand Consumers.
Producers
Increased production and increased
revenue/profit and flow on effect eg hire more
workers.
Consumers
Less milk solids available for NZ consumers
and they pay a higher price.
Ae
3 points
Me
5 points
explained
E
90795 Trade
(d) Explain the impact of this increased payout to Dairy farmers on
Inflation and Economic Growth.
Inflation
Increased income for dairy producers leads
to increased investment (I) and/or
consumption (C) which increases AD in the
economy which leads to increased price
level (inflation).
(Note: do not accept increased price of milk
solids is inflation, this is a price rise in a
single market)
Economic Growth
Increased export income leads to increased
AD. NZ firms increase their output to meet
this demand leading to economic growth.
Ae
Effect on
inflation
stated.
Ae
Effect on
growth
stated
Me
E
Effect on
inflation
explained.
Me
Effect on
growth
explained
E
90795 Trade
(e) Explain the impact you think record dairy prices will have on other
types of farming, such as sheep farming, in New Zealand.
A
Will be decrease in production by other types
of farming as resources are switched to dairy
where they are relatively more profitable.
Me
Valid
explanation
E
90795 Trade
(a) Place ONE tick in each row to indicate how each transaction would be
classified in the New Zealand Balance of Payments.
i.
ii.
iii.
iv.
v.
Goods
Income
Capital
Services
Financial
A
M
E
Three
correct
(b) Which column is the main cause of New Zealand
a large
Ac running M
Current Account Deficit?
E
Correct
Balance on Income
(c) Explain your answer to Question (b).
There is proportionally more foreign
investment in NZ than NZ investment abroad
so there will be more income from
investments leaving NZ than entering.
A
Mc
Correct
explanation
E
90795 Trade
(d) Explain what a large Current Account deficit means for the Financial
Account.
Ae
There will be a Financial account surplus as
NZ must borrow or use savings (Change in
reserves) to fund the deficit.
States a
financial
account
surplus
A
Me
E
Explains
why there is
a financial
account
surplus.
M
E
1MC & 2ME
from
3(d), 3(e),
4(c), 4(d)
90795 Trade
(a) Explain why Fisher and Paykel would want to move operations to Mexico
given the effect of (i) a high exchange rate and (ii) high freight and
labour costs.
High exchange rate
Leads to a fall in export earnings as revenue
from sales overseas translates into fewer
$NZ. By moving to Mexico F&P will not suffer
these currency losses.
A
High Freight and Labour Costs
Mexico is closer to the American market so
freight costs will be lower. Mexico is a low
wage economy so the wage bill for F&P will
be lower.
A
Me
E
Valid
explanation
Me
Valid
explanation
E
90197 Describe the concept of supply
JUDGEMENT
Achievement
1  AC
1  AE
6 other A or better
Achievement with
Merit
Achievement with
Excellence
1  MC
1  ME
1 other M
7 other A or better
1  MC
1  ME
2 other MC or ME
1E
7 other A or better
A C and M C refers to causes.
A E and M E refers to effects.