International trade and the global economy - OCR GCSE Economics (J205) module overview

International trade and the global economy (OCR J205 topics 2.10 to 2.13) is where the macroeconomics component turns outward to how a country trades with the rest of the world. It covers why trade happens, how it is recorded, how exchange rates work, why governments sometimes restrict trade, and how globalisation connects economies. It is examined in J205/02: National and international economics. This page maps the module and links to a focused answer for each dot point.

What this module covers

The module moves from why countries trade, to how trade is recorded and priced, to the policy choices and the wider process of globalisation.

• International trade. Why countries import and export, the meaning of imports and exports, the benefits of trade, and the gains from specialisation between countries.
• Balance of payments. The balance of payments and the current account, trade surpluses and deficits, and the causes and consequences of a trade imbalance.
• Exchange rates. What an exchange rate is, how to convert between currencies, and how an appreciation or depreciation affects exporters, importers and consumers.
• Free trade and protectionism. Free trade agreements and trading blocs (including the European Union), the methods of protection (tariffs, quotas and subsidies), and the arguments for and against protectionism.
• Globalisation and multinationals. What globalisation is and its causes, the role of multinational companies, and the costs and benefits for producers, workers and consumers in developed and less developed countries.

The big idea: trade brings gains but also choices

Everything in this module flows from the gains from trade and the choices they raise.

• Countries trade because specialisation lets each produce what it is best at and buy the rest more cheaply, raising total output.
• Trade has to be recorded and priced: the balance of payments records the flows, and the exchange rate sets the price of one currency in another.
• Trade creates winners and losers, which is why governments debate protectionism, and why globalisation is judged on economic, social and environmental grounds.

How it is assessed

This module is examined in J205/02: National and international economics, which is 1 hour 30 minutes, 80 marks and 50% of the GCSE. Expect multiple choice questions, a currency-conversion or balance-of-trade calculation, and longer Explain and Discuss questions on the effects of exchange-rate changes, the case for and against protectionism, and the costs and benefits of globalisation. A calculator is allowed.

How to revise this module

1. Nail imports versus exports. Exports earn money (out of the country's goods, into its accounts); imports spend it. Get the direction right before anything else.
2. Drill the calculations. Practise the balance of trade (exports minus imports) and currency conversion (multiply from pounds, divide back into pounds) until they are automatic.
3. Learn the trade mnemonics. SPICED (strong pound, imports cheaper, exports dearer) and WPIDEC (weaker pound, imports dearer, exports cheaper) give you the exchange-rate effects fast.
4. Build two-sided arguments. Protectionism and globalisation are evaluation topics: prepare the benefits, the costs, and a justified judgement for each.

For the official specification

OCR publishes the full specification (J205), past papers and mark schemes at ocr.org.uk. Always revise from the current specification and OCR's own past papers.