CAIE A-Level Economics 10.2.4 Growth and Balance of Payments

CAIE A-Level Economics 10.2.4 Growth and Balance of Payments
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise tracing economic growth through household import demand, export capacity, competitiveness and capital flows and judging when growth worsens or improves the balance of…

How this is tested

  • link higher income and consumption during growth to greater import demand and a weaker current account
  • explain how productivity, lower unit cost or export capacity can improve trade performance
  • evaluate the balance effect using growth source, import propensity and investor confidence

Question 20

[Maximum number: 1]

High economic growth is often accompanied by a worsening of the current account of the balance of payments.

Which reason for this trend is not valid?

A

Economic growth raises domestic consumption, leaving very little to sell to overseas consumers.

B

Economic growth raises domestic output, leading to lower prices and more price-competitive goods both at home and abroad.

C

Economic growth raises incomes and leads to rising demand for foreign goods.

D

Economic growth results in rising requirements of inputs from other countries.