A UK business imports an industrial refrigeration unit from Veldon. A trade agreement would remove the UK tariff on the units. Table 1 shows the current data and the data with the agreement.
| Measure | Current | With agreement |
|---|---|---|
| Exchange rate | V$1.20 per £1 | V,$1.35 per £1 |
| Price before UK tariff | V$540 | V,$540 |
| UK tariff | 8% | 0% |
Calculate the percentage decrease in the sterling price paid by the UK importer when the agreement is introduced. Give your answer to one decimal place.
118 exam-style questions on AQA GCSE Economics 2.4 International trade and the global economy, covering 2.4.1a The importance of trade, 2.4.1b Advantages of trade and interdependence, 2.4.1c UK exports and imports, 2.4.2a How exchange rates are determined, 2.4.2b Effects of exchange rate changes, 2.4.3a Free-trade and its arguments, 2.4.3b Free-trade agreements such as the EU, 2.4.4a Features and growth of globalisation, 2.4.4b Benefits and drawbacks of globalisation, and 2.4.4c Moral, ethical and sustainability considerations. Each one has a worked solution and a mark scheme showing where the marks go.