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IB Economics HL 4.6.3 Interdependence Between Accounts Questions

Practise 4.6.3 Interdependence between accounts in IB Economics HL by reviewing the concepts and applying them to marked questions.

Syllabus
First assessment 2022
Course
Economics HL
Level
HL

Exam points

  • The balance of payments has an overall zero balance
  • Credits are matched by debits
  • Deficits are matched by surpluses

IB Economics HL 4.6.3 Interdependence Between Accounts Questions question 1

[Maximum number: 3]

Table 1 shows the gross domestic product (GDP) of the United States of America (USA) economy from 2020 to 2023. The USA is not the fastest growing economy in the world, but it is the largest. It also has the largest budget deficit and the largest current account deficit in the world. As a result, the actions of its central bank, the Federal Reserve, always make news.

Table 1

Table 1

Using Table 2, calculate the size of the financial account for Quarter 4 (Q4) only.

The USA recorded a trade deficit of USD 819 billion in 2023. This was a slight reduction from 2022, when it was USD 951 billion. One of the reasons for the fall in the trade deficit could be the exchange rate. In the final four months of the year, the USD depreciated against the Chinese Yuan (CNY). China is the USA's largest trading partner, even though recent trade relations between the two countries have been characterized by tariffs and retaliatory measures. Figure 1 shows the price of the USD in terms of the CNY from September to December 2023.

Figure 1

Figure 1

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