Question 5(b)
[Maximum number: 12]
Assess whether an economy will always benefit from having a surplus on the current account of its balance of payments.
CAIE A-Level Economics 6.3 Current Account of the Balance of Payments Question Bank
Practise classifying current-account credits and debits, calculating trade and current balances and explaining deficits or surpluses through competitiveness, income and exchange…
Exam points
- classify goods, services, primary income and secondary income as current-account flows
- calculate component and overall balances with exports or receipts as credits and payments as debits
- explain imbalance through relative inflation, exchange rates, domestic income and foreign demand
Covered syllabus points
Question 27
[Maximum number: 1]
What is an example of primary income in the current account of the balance of payments of Pakistan?
A
dividends received by a Pakistani resident from shares in a domestic firm
B
profits of Pakistani businesses exporting goods
C
rent received by a Pakistani resident from a property in another country
D
salary received by a Pakistani engineer from a foreign-owned producer operating in Pakistan
Question 27
[Maximum number: 1]
What is most likely to lead to a persistent surplus in a country's current account of its balance of payments?
A
a low domestic savings rate
B
an undervalued exchange rate
C
highly protectionist policies by other countries
D
low investment income from abroad
Question 29
[Maximum number: 1]
Turkey imported $ 220 million worth of goods and services. Turkey exported $ 12 million worth of goods and services during the same period. Its net income was -$ 15 million.
What is Turkey's current account balance?
A
-$ 223 million
B
- $ 217 million
C
+$ 208 million
D
+$ 247 million