Exam Answer Builder

Exam practice for the NCEA Level 2 international trade exam. Each question set gives a short New Zealand context (with illustrative figures) and then 2–4 parts that build up from Achieved to Excellence, as the exam’s questions do. Choose a model in the title bar, pick a set, and work through its parts.

• Graph parts: drag a curve sideways (or choose it and use the arrow buttons) to shift it; drag the world price or trade price line up or down; label the exports and imports; tap where the curves cross to mark a new equilibrium; tap the pieces of a graph to shade an area. Check marks each thing an examiner would look for: the right curve, the right direction, the price, the labels.
• Calculations: type your answers (a $ sign or commas are fine). A common slip is recognised and explained, and the worked solution appears after you check.
• Written parts: build your answer from the sentence blocks: choose the ones that belong and put them in order. Some blocks are wrong or irrelevant, as a tempting mistake would be. The checklist then shows what your answer does and what a Merit or Excellence answer still needs, and the model answer appears. You can also write the answer in your own words: the computer doesn’t mark what you type. You mark it yourself against the same checklist.
• At the end of each set, a summary shows which elements of a good answer you showed, and every mistake with its correction.

The three models

• Two-country model: the market in New Zealand and in another country side by side, on the same price axis. With trade, both face one trade price (P_t), between the two no-trade prices, where one country’s exports (X) equal the other’s imports (M). A change in either country’s supply or demand changes P_t.
• Price-taker model: New Zealand is too small a part of the world market to change the world price (P_w), drawn as a horizontal line. Above New Zealand’s no-trade price, the gap between quantity supplied and quantity demanded is exported; below it, the gap is imported. A change in New Zealand’s supply or demand changes exports or imports, not the price.
• The NZ$ market: the demand for NZ$ comes from overseas buyers of New Zealand’s exports (goods, tourism, education) and investors; the supply of NZ$ from New Zealanders paying for imports and travel overseas. More demand or less supply appreciates the NZ$; less demand or more supply depreciates it.

How the exam asks for depth. NZQA’s criteria step up from analysing trade, to analysing it “in depth”, to analysing it “comprehensively”. In practice: Achieved explains a cause or an impact using a model; Merit explains it in detail, referring to the model’s labels; Excellence compares and contrasts the impact on two groups (or two causes), says which is greater and why, and integrates the changes on the model into the explanation.

Common exam mistakes

• Shifting a New Zealand curve when the world price changes. A change in P_w moves the price line; producers and consumers move along their curves.
• Saying the price in New Zealand changes when New Zealand’s supply or demand shifts in the price-taker model: it stays at P_w, and exports or imports change instead.
• Saying a stronger NZ$ helps exporters. Exporters earn foreign currency; when the NZ$ appreciates, each US$ converts into fewer NZ$.
• Mixing up who demands and who supplies NZ$: exporters and tourists coming here demand NZ$; importers and New Zealanders travelling overseas supply NZ$.
• Using the whole quantity supplied for export receipts. Export receipts are the price × exports (X), the gap only.
• Writing “as seen on the graph” instead of naming the change (P_w → P_w1, X → X₁), or repeating the resource material without explaining it.

The questions are original practice in the style of the external exam: they are not NZQA’s, and the figures in them are illustrative. This shows which elements of an answer you have shown; it isn’t an NCEA grade.

Objective: NCEA Level 2 Economics 91223 — analyse international trade using economic concepts and models: the two-country model, New Zealand as a price taker, and the supply of and demand for the NZ$; major exports, imports and markets; the balance on goods and services in the current account; and the impacts on groups in New Zealand society.