IGCSE Development Studies: Specimen Questions with Answers 21 - 23 of 98

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Forms of Free Trade

Question 21 (6 of 7 Based on Passage)

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Differentiate between free trade and custom union

Explanation

Differentiate between Free Trade and Custom Union
S. No.Free TradeCustom Union
1.The free trade area economic integration is the is the least restrictive among the countries.Members of custom union dismantle barriers to trade in goods and services among themselves.
2.In a free trade area, all the barriers to trade among member countries are removed.A custom union establishes a common trade policy with respect to non-members
3.No external tariffCommon external tariff

Question 22 (7 of 7 Based on Passage)

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Free trade is good for nations?

Explanation

The Nations Which Can Benefit from Free Trade Are

  • The exporters with competitive advantage
  • The nations having workers who gain jobs in export industries.
  • Nation having net economic welfare gain for society
  • Consumers of nations who get benefits from cheaper prices.
  • Domestic firms who see higher demand from consumers who now have more disposable income due to cheaper imports.
  • The nation whose consumers see lower prices due to the competitive pressure of trade.

Passage

GNP data of South Africa is as follows:

  • South Africa GNP for was $ 0.00 B, a 100 % decline from 2019.
  • South Africa GNP for 2019 was $ 353.53 B, a 6.38 % increase from 2018.
  • South Africa GNP for 2018 was $ 332.32 B, a 7.74 % increase from 2017.
  • South Africa GNP for 2017 was $ 308.44 B, a 0.34 % increase from 2016.

Question 23 (1 of 6 Based on Passage)

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Is South Africa a developed country or developing country?

Explanation

South Africa has in abundance natural resources and goods; it has made a remarkable progress in the industrial sector but it is still counted as a developing nation. South Africa has self-sufficiency, investment in exports is the main source of revenue for the government and exchange flows to deal with import, largest contributor to the GDP of the country is industrial sector with 33 % and service sector with 66 % , the country is rich in natural resource and has cheap labor. Despite all the possibilities South Africa is a developing nation because

  • Export and domestic investment have a positive impact on the growth of the economy but the imports have a negative impact.
  • The added value of agriculture and imports is very low in South Africa
  • South Africa has very unfavorable environment for agriculture and capacities to invest in the agricultural sector.
  • In South Africa agriculture is the only sector which can help in removing unemployment and eradicating poverty.

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