Using Item A, explain two advantages of foreign trade for the UK economy.
How to approach this question
1. Carefully read Item A and identify two distinct advantages of foreign trade mentioned in the text. 2. For the first advantage, quote or refer to the relevant part of the text. Then, use your own economic knowledge to explain *why* this is an advantage (e.g., how accessing wider markets helps firms). 3. Repeat this process for the second advantage. Structure your answer clearly with two separate points.
Full Answer
Item A provides several clues to the advantages of foreign trade. A good answer will select two and develop them.
- **Wider Markets:** The text explicitly mentions this. The economic explanation involves firms being able to sell to a larger customer base, which can lead to higher revenue, profits, and economies of scale. This makes firms more secure and can lead to growth and job creation.
- **Contribution to GDP/Economic Growth:** The text states trade contributes almost 30% to GDP. The economic explanation is that exports (X) are a component of Aggregate Demand (AD = C+I+G+(X-M)). An increase in exports is an injection into the circular flow of income, boosting national output and creating jobs.
- **Access to cheaper/better imports:** Although the question focuses on advantages, and Item A is more focused on exports, a student could infer the benefit of imports (e.g., 'cheaper imports of goods' like chlorinated chicken, which is a benefit to consumers even if controversial). This gives consumers more choice and lower prices, increasing their real income.
Common mistakes
Simply copying out sections of Item A without adding any of your own explanation. Not clearly separating the two advantages into distinct points.
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