Albania is a country in Southeastern Europe with an estimated population of about 2.8 million in 2022. The Albanian economy has been transitioning from a centrally planned system to a market-based system and has experienced positive real GDP growth in recent years. Tourism is a significant contributor to Albania’s GDP, and the government has intensified efforts to promote the country’s attractions along its Adriatic and Ionian coasts.
In 2022, Albania’s unemployment rate was around 12%, partly due to structural challenges in the economy. The government operates a progressive personal income tax system, with rates ranging from 0% up to 23%. Corporate income tax is set at 15%. Value-added tax (VAT) on most goods and services stands at 20%.
Albania’s trade balance remains negative, as the country’s main exports (textiles, footwear, and mineral fuels) have not kept pace with imports (machinery, food, and manufactured goods). The government has embarked on several infrastructural projects to attract foreign investment and reduce transport costs, including a newly announced US$200 million investment in highways. Economists estimate the marginal propensity to consume (MPC) in Albania to be about 0.8.
Table 1: Selected Macroeconomic Indicators for Albania
Year
Real GDP (billion US$)
Unemployment Rate (%)
Gini Coefficient
2021
15.2
11.5
0.30
Table 2: Tourism Data in Albania (2022)
Price per Tour Package (EUR)
Quantity Demanded of Tour Packages (thousands)
400
140
450
120
(a)
Using the information provided in Table 1, the percentage change in Albania’s real GDP between 2021 and 2022.
[2]
(b)
The Albanian government’s US$200 million highway project is expected to raise national income through the Keynesian multiplier, assuming the marginal propensity to consume (MPC) is 0.8. the total increase in national income that could result from this project.
[2]
(c)
Using the data in Table 2, the price elasticity of demand (PED) for Albania’s tour packages when the price increases from EUR 400 to EUR 450.
[2]
(d)
HLPaper 3
Vietnam is an emerging economy in Southeast Asia that has seen rapid industrialization over the past decade. The nation relies heavily on its manufacturing sector, which contributes significantly to its export earnings. However, certain domestic sectors, such as the heavy metals industry, have struggled to remain competitive against lower-priced imports. In 2023, the Vietnamese government considered various trade protection measures to support local steel producers who claimed that foreign firms were selling products below the cost of production in the domestic market.
Steel is a vital component for the construction and automotive industries in Vietnam. To address the surge in imports, the government implemented a trade barrier to increase the domestic price and reduce the volume of imports. While this measure was welcomed by local mill owners, representatives from the construction sector warned that increased costs for raw materials could lead to project delays and higher housing prices.
Table 1: Macroeconomic Indicators of Vietnam (2020–2023)
SL & HLPaper 1
(a)
With the aid of a correctly labelled demand and supply diagram, how an import quota can affect a domestic market that was previously open to free trade.
[10]
(b)
the likely impact of an import quota on domestic consumers, domestic producers and overall economic welfare in the country.
[15]
HLPaper 3
Solana is an emerging agricultural economy in Southeast Asia with a population of approximately 35 million. While the country has successfully industrialized its urban centers, the rural regions remain heavily dependent on rice cultivation, which provides employment for nearly 40% of the labor force. Rice is not only a dietary staple but also a culturally significant commodity. However, Solana's domestic rice farmers face significant pressure from large-scale exporters in neighboring countries, where production costs are lower due to favorable climates and advanced irrigation technologies.
In recent years, the Solanian government has prioritised food security and the protection of rural livelihoods. To achieve this, they have moved away from free trade in the rice sector. In , following a period of high import volumes that depressed local prices, the Ministry of Agriculture introduced a strict import quota on rice. This policy aimed to stabilize domestic prices and encourage local production, though it sparked debates regarding its impact on urban poverty and international trade relations.
SL & HLPaper 3
Poland is a country in Central Europe with a population of approximately 38 million. Its membership in the European Union (EU) has contributed to strong economic ties with other European nations. In recent years, Poland has experienced both robust economic growth and rising inflationary pressures. While unemployment remains low, concerns about income inequality have drawn the government’s attention.
Poland is also one of the largest producers of apples in the EU, exporting a significant portion of its harvest to other European countries, especially Germany. However, rising production costs and shifting demand conditions have affected both domestic producers and international consumers of Polish apples. Discussions surrounding potential government interventions include tax policy changes, labor market incentives, and expanded social welfare programs. The statistics below provide insights into macroeconomic performance, apple market dynamics, taxation, and household consumption behavior in Poland.
Table 1: Selected Macroeconomic Data for Poland
IB Economics Topic 4.2 Types of Trade Protection Questionbank
Practice IB Economics Topic 4.2 Types of Trade Protection with authentic exam-style questions for both SL and HL students. This question bank focuses on the exact syllabus content for 4.2 Types of Trade Protection and mirrors Paper 1, 2, 3 style where relevant.
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2022
16.0
12.0
0.31
Using the data in Table 1, the absolute change in the unemployment rate between 2021 and 2022.
Using the text/data provided and your knowledge of economics, recommend a policy which the government of Albania could implement in order to reduce unemployment.
Using the information in Table 3, the reduction in the volume of imported steel (in millions of tons) that occurred after the implementation of the tariff.
Using the data in Table 3, the change in total consumer expenditure on steel (in US$ millions) when the price rises from $400 to $450.
[2]
(e)
the term “ad valorem tariff.”
[2]
(f)
Using the diagram in Figure 1, how the imposition of the tariff affects the surplus of domestic steel producers and the efficiency of resource allocation in Vietnam.
[4]
(g)
Using the information in Table 3, the change in total revenue for domestic steel producers (in US$ millions) resulting from the tariff.
[2]
(h)
two possible negative impacts of protecting the steel industry on other sectors of the Vietnamese economy.
[4]
(i)
Using the provided information and your knowledge of economics, the decision of the Vietnamese government to impose a tariff on imported steel. your response.
[10]
2023
The following tables provide data on Solana’s macroeconomic indicators and the domestic rice market.
Table 1: Selected Economic Data for Solana (2022–2023)
Indicator
2022
2023
Population (millions)
34.2
35.0
Nominal GDP ($ billions)
240
252
Rice Sector Value ($ billions)
28.8
30.5
Rural Unemployment Rate (%)
6.2
5.8
Food Security Index Score (0-100)
54
58
Table 2: Quarterly Domestic Rice Market Data in Solana
Price per Tonne ($)
Domestic Quantity Demanded (thousand tonnes)
Domestic Quantity Supplied (thousand tonnes)
120
1 000
200
150
850
350
180
700
500
210
550
650
Table 3: Solana Rice Trade Policy Data (2023)
Indicator
Value
World Price (Pw)
120 per tonne
Import Quota Limit
500 thousand tonnes
Resulting Domestic Price
150 per tonne
Note: Assume Solana is a small open economy and a price-taker in the global rice market.
Use the diagram below for the relevant part.
(a)
Using the data in Table 2 and Table 3, the percentage change in the domestic price of rice in Solana resulting from the implementation of the import quota.
Using the information in Table 2, the price elasticity of supply (PES) for Solana’s domestic rice when the price increases from 120 to 150 per tonne.
[2]
(d)
the change in total quarterly consumer expenditure on rice in Solana after the quota is implemented. Show your working.
[2]
(e)
the term "quota."
[2]
(f)
Using the diagram provided, the effect of an import quota on domestic production and the volume of imports in Solana.
[4]
(g)
Using the data in Table 2 and Table 3, the import penetration ratio (imports as a percentage of total domestic consumption) before and after the quota was introduced. Show your working.
[2]
(h)
two reasons why the government of Solana might choose to protect its domestic rice industry from foreign competition.
[4]
(i)
Using the information provided, the impact of using an import quota to protect the rice industry in Solana. Recommend whether the government should maintain the quota or transition to a different policy.
[10]
Indicator
2021
2022
Real GDP (billion PLN, at 2015 prices)
2200
2310
Inflation rate (CPI, %)
5.1
14.3
Unemployment rate (%)
3.4
3.0
Gini coefficient
0.30
0.32
Population (millions)
38.1
38.2
Estimated average Marginal Propensity to Consume (MPC)
0.8
0.8
Table 2: Apple Market Data (Exports to Germany)
Price per kilogram (euros)
Quantity Demanded (thousand metric tons)
Quantity Supplied (thousand metric tons)
2.00 (in 2021)
600
620
2.40 (in 2022)
Table 3: Corporate Taxation in Poland (2022)
Type of tax
Rate
Corporate Income Tax (CIT)
19%
Personal Income Tax (progressive)
17% up to certain threshold, 32% beyond
A representative firm’s net profit (million PLN)
15
(a)
Using information from Table 1, the real GDP growth rate for Poland between 2021 and 2022.
The Polish government decides to increase its expenditure by 5 billion PLN. Assuming the Marginal Propensity to Consume (MPC) in Poland remains at 0.8, the change in real GDP that may result from this increase in government spending.
[4]
(c)
Using the data in Table 2, the price elasticity of demand (PED) for Polish apples in Germany when the price increases from €2.00 to €2.40 per kilogram.
[2]
(d)
Using the data in Table 2, the price elasticity of supply (PES) for Polish apples over the same price range.
[2]
(e)
the term “income inequality.”
[2]
(f)
Using an AD/AS diagram, one possible impact on Poland’s real GDP and price level if rising inflation continues to reduce households’ real incomes.
[4]
(g)
If the corporate income tax rate were reduced from 19% to 15%, a diagram to illustrate the possible effect on investment by Polish firms.
[2]
(h)
Using information from Table 1 and the text, how a rising Gini coefficient may affect long-term economic growth in Poland.
[4]
(i)
Using the text and data provided and your knowledge of economics, recommend one policy that the government of Poland could implement to address the challenges posed by both high inflation and rising income inequality. your recommendation.
