Current Account of Balance of Payments (Cambridge (CIE) IGCSE Economics)

Exam Questions

2 hours37 questions
11 mark

The table shows a country’s exports and imports.

 

$m

exports of goods

imports of goods

exports of services

imports of services

200

190

35

38

What was the country’s balance of trade in goods and services?

  • a deficit of $7 million

  • a deficit of $13 million

  • a surplus of $7 million

  • a surplus of $13 million

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21 mark

Which measure would a government take to reduce a current account deficit?

  • increase tariffs

  • increase value added tax

  • reduce income tax

  • reduce domestic subsidies

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31 mark

A government is faced with an unwanted deficit on the current account of its balance of payments.

Which action is most likely to reduce the deficit?

  • raising government spending on welfare benefits

  • reducing income tax

  • restricting imports by raising tariffs

  • revaluing its currency

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41 mark

In July 2015, Australia’s balance of trade with the rest of the world was –2809 billion Australian dollars. In January 2016 it was –3294 billion Australian dollars.

What describes Australia’s balance of trade over this period?

 

balance of trade

trend

A

B

C

D

deficit

deficit

surplus

surplus

improving

worsening

improving

worsening

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    51 mark

    In 2012 the UK held the Olympic Games, which attracted a large number of visitors from foreign countries.

    Which item of the UK’s current account balance will have benefited directly from this event?

    • export trade in goods

    • export trade in services

    • import trade in goods

    • import trade in services

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    11 mark

    A country wishes to increase a current account surplus on the balance of payments. Which action would it take?

    • abolish an import quota

    • increase import tariffs

    • remove export subsidies

    • tax export producers

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    21 mark

    The diagram shows the value of a country’s exports and imports of goods over five years.

    Between which two years did the country have an increase in the value of imports and an improvement in its balance of trade in goods?

    screen-shot-2023-03-02-at-10-03-26-am
    • 1 and 2

    • 2 and 3

    • 3 and 4

    • 4 and 5

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    31 mark

    What would cause a favourable change in the Kenyan trade in services (invisible) account?

    • A Kenyan company wins a contract to transport exports from Uganda.

    • A Kenyan tea company increases its exports.

    • A Kenyan trade delegation promoting coffee sales visits India.

    • A Zambian company increases its exports to Kenya.

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    41 mark

    The table shows information from a country’s current account of its balance of payments.

     

    $ billion

    exports of goods

    imports of goods

    net services

    net primary income

    net secondary income

    20

    24

    +5

    -8

    -8

    What is the country’s current account balance?

    • +$1 billion

    • –$4 billion

    • –$7 billion

    • –$15 billion

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    51 mark

    What is most likely to happen if South Korea builds a factory in Switzerland that becomes profitable?

    • South Korea’s imports of goods will decrease.

    • South Korea’s investment income will increase.

    • Switzerland’s trade balance in goods will worsen.

    • Switzerland’s trade balance in services will improve.

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    61 mark

    Which government policy is most likely to improve a country’s balance of trade?

    • a decrease in direct taxation

    • a decrease in the exchange rate

    • a decrease in the level of tariffs

    • an increase in government expenditure

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    71 mark

    It is estimated that in 2016 the Olympic Games in Rio, Brazil attracted over 600 000 foreign visitors.

    What is likely to have been the result of this number of visitors?

    • a depreciation of Brazil’s currency

    • a fall in Brazil’s rate of inflation

    • an increase in the Brazilian government’s budget deficit

    • a reduction in Brazil’s deficit on the current account of its balance of payments

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    11 mark

    The table shows a selection of economic data for a country.

     

    $ m

    primary income (net income transfers)

    secondary income (net current transfers)

    total value of exported goods

    total value of imported goods

    total value of exported services

    total value of imported services

    1000

    -500

    1000

    2000

    800

    200

    What is the current account balance of this country?

    • $100 m

    • $600 m

    • $4500 m

    • $4725 m

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    21 mark

    What would cause a rise in the deficit on the current account of the balance of payments?

    • a fall in foreign direct investment into the country

    • a fall in interest earned on overseas investment by the country

    • a fall in the value of imported manufactured goods into the country

    • a rise in the revenue earned from tourism in the country

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    31 mark

    What would not be included in the current account of the balance of payments?

    • dividends earned from a firm in another country

    • imports of TVs from another country

    • purchase of a house in another country

    • rents paid to owners of land in another country

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    41 mark

    The diagram shows the value of a country’s exports and imports of goods over five years.

    646401-nov-2020-qp-13-fig-30

    Between which two years did the country have an increase in the value of imports and an improvement in its balance of trade in goods?

    • 1 and 2

    • 2 and 3

    • 3 and 4

    • 4 and 5

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    51 mark

    Which item will register as an outflow on the services section of the current account of the US balance of payments?

    • money paid by chemical producers in the US for foreign oil

    • money paid by foreign firms for US cars

    • money paid by migrant workers in the US to their families overseas

    • money paid by US tourists visiting attractions in other countries

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