The International Economy - CCEA GCSE Economics guide to trade, the balance of payments, exchange rates and globalisation

The International Economy is Section 5 of CCEA GCSE Economics (specification 7510) and the section that connects the UK economy to the rest of the world. It explains why countries trade and how trade is recorded, how exchange rates set the price of trade, and how globalisation is binding economies ever closer together. This guide maps the section and links to every specification-level answer page.

International trade

Imports are bought from abroad, exports are sold abroad, and countries trade because specialising in what they do best and exchanging for the rest raises total output. Trade brings lower prices, more choice and bigger markets but can cost domestic jobs. The balance of payments records these flows: a trade surplus is exports above imports, a deficit the reverse. Protectionism (tariffs and quotas) protects domestic firms and jobs but raises prices, cuts choice and risks retaliation, so free trade is usually preferred.

Exchange rates

An exchange rate is the price of one currency in terms of another, set by the demand for and supply of the currency. An appreciation is a rise in its value, a depreciation a fall. The rule is SPICED: a Stronger Pound makes Imports Cheaper and Exports Dearer. So a weaker pound makes exports cheaper and imports dearer, which can help the trade balance but adds to cost-push inflation. You also need to convert currencies using a given rate.

Globalisation

Globalisation is the growing integration and interdependence of the world's economies, driven by cheaper transport, better communications, the removal of trade barriers and the growth of multinational companies. Multinational companies locate where costs are low and sell worldwide, bringing host countries jobs, investment and technology but raising concerns over low wages, profits leaving the country and environmental harm. Globalisation benefits consumers and developing economies but can cost jobs in higher-cost countries.

How this section is assessed

This section is assessed through definitions, calculations and extended evaluation. Calculations cover the trade balance and currency conversion; the longer questions reward a balanced evaluation of protectionism, of a changing exchange rate, and of globalisation and multinational companies, each ending in a supported judgement.

How to revise this section

1. Learn imports, exports and why countries trade, and practise the trade-balance calculation.
2. Master currency conversion and learn SPICED for exchange-rate effects.
3. Learn the causes of globalisation and the role of multinational companies.
4. Practise evaluations of protectionism, exchange-rate changes and globalisation.
5. Finish with timed CCEA past papers to get used to the command words.

Syllabus, dot point by dot point

• International trade
• Exchange rates
• Globalisation

For the official specification

CCEA publishes the full specification (7510), past papers and mark schemes at ccea.org.uk. Always revise from the current specification and CCEA's own past papers, because question style is board-specific.