Current account of the balance of payments — Paper 3 · A Level Economics 9708

30 A country introduces import quotas. The suppliers of imported goods charge market-clearing prices. Assuming the demand for imports is price-inelastic, what will be the impact on the country’s balance of trade and on its terms of trade? balance of trade terms of trade A improves improve B improves worsen C worsens improve D worsens worsen

1 marks

Answer: D

This question in 9708/31 Oct/Nov 2010

30 A country introduces import quotas. The suppliers of imported goods charge market-clearing prices. Assuming the demand for imports is price-inelastic, what will be the impact on the country’s balance of trade and on its terms of trade? balance of trade terms of trade A improves improve B improves worsen C worsens improve D worsens worsen

1 marks

Answer: D

This question in 9708/32 Oct/Nov 2010

29 A country introduces import quotas. The suppliers of imported goods charge market-clearing prices. Assuming the demand for imports is price-inelastic, what will be the impact on the country’s balance of trade and on its terms of trade? balance of trade terms of trade A improves improve B improves worsen C worsens improve D worsens worsen

1 marks

Answer: D

This question in 9708/33 Oct/Nov 2010

14 The table shows data on a country’s gross national product at market prices and on domestic spending. year 1 year2 | year 3 ($m) ($m) ($m) GNP at market prices 420 440 560 private consumption 200 260 300 government consumption 120 120 140 gross investment 90 80 130 In which of these years will the country be faced with a deficit on the current account of the balance of payments? year 1 year 2 year 3 A x v v B x v x Cc v x v D v x x

1 marks

Answer: A

This question in 9708/31 May/June 2011

27 Why might a reduction in domestic interest rates have an adverse effect on a country’s balance of payment on current account? A It will cause a rise in the exchange rate. B It will make the country’s industry less competitive. C The resulting higher level of economic activity is likely to increase imports. D There will be an outflow of capital from the country.

1 marks

Answer: C

This question in 9708/31 May/June 2011

13 The table shows data on a country’s gross national product at market prices and on domestic spending. year 1 year2 | year 3 ($m) ($m) ($m) GNP at market prices 420 440 560 private consumption 200 260 300 government consumption 120 120 140 gross investment 90 80 130 In which of these years will the country be faced with a deficit on the current account of the balance of payments? year 1 year 2 year 3 A x v v B x v x Cc v x v D v x x

1 marks

Answer: A

This question in 9708/32 May/June 2011

26 Why might a reduction in domestic interest rates have an adverse effect on a country’s balance of payment on current account? A It will cause a rise in the exchange rate. B It will make the country’s industry less competitive. C The resulting higher level of economic activity is likely to increase imports. D There will be an outflow of capital from the country.

1 marks

Answer: C

This question in 9708/32 May/June 2011

13 The table shows data on a country’s gross national product at market prices and on domestic spending. year 1 year2 | year 3 ($m) ($m) ($m) GNP at market prices 420 440 560 private consumption 200 260 300 government consumption 120 120 140 gross investment 90 80 130 In which of these years will the country be faced with a deficit on the current account of the balance of payments? year 1 year 2 year 3 A x v v B x v x Cc v x v D v x x

1 marks

Answer: A

This question in 9708/33 May/June 2011

26 Why might a reduction in domestic interest rates have an adverse effect on a country’s balance of payment on current account? A It will cause a rise in the exchange rate. B It will make the country’s industry less competitive. C The resulting higher level of economic activity is likely to increase imports. D There will be an outflow of capital from the country.

1 marks

Answer: C

This question in 9708/33 May/June 2011

26 How will outward migration from a developing economy affect its balance of payments? A It may improve its balance of payments by increasing its export capacity. B It may improve its balance of payments by increasing inflows of current transfers. C It may worsen its balance of payments by causing its currency to depreciate. D It may worsen its balance of payments by increasing consumer expenditure on imported goods.

1 marks

Answer: B

This question in 9708/33 May/June 2012

17 The table shows data on a country’s gross domestic product (GDP) at market prices and on domestic spending. year 1 year 2 year 3 ($m) ($m) ($m) GDP at market prices 630 650 680 private consumption 460 470 480 government consumption 140 160 170 gross investment 20 30 50 In which of these years will the country be faced with a balance of trade deficit? year 1 year 2 year 3 A no no yes B yes yes no C no yes yes D yes no no

1 marks

This question in 9708/33 Oct/Nov 2012

16 Which correctly identifies injections into a country’s circular flow of income? private sector public sector trade sector (S > I) (T > G) (X > M) A no no no B no no yes C yes no no D yes yes yes

1 marks

Answer: B

This question in 9708/31 May/June 2013

19 The table shows data on a country’s gross national product at market prices and on domestic spending. year 1 year 2 year 3 ($m) ($m) ($m) GNP at market prices 420 440 560 private consumption 200 260 300 government consumption 120 120 140 gross investment 90 80 130 In which of these years will the country be faced with a deficit on the current account of the balance of payments? year 1 year 2 year 3 A no yes yes B no yes no C yes no yes D yes no no

1 marks

Answer: A

This question in 9708/33 Oct/Nov 2014

18 The table shows data on a country’s gross domestic product (GDP) at market prices and on domestic spending. year 1 year 2 year 3 ($million) ($million) ($million) GDP at market prices 630 650 680 private consumption 460 470 480 government consumption 140 160 170 gross investment 20 30 50 In which of these years will the country be faced with a balance of trade deficit? year 1 year 2 year 3 A no no yes B yes yes no C no yes yes D yes no no

1 marks

This question in 9708/31 Oct/Nov 2015

22 The current account on the balance of payments moves into deficit. What is a possible reason for this? A a decrease in tax revenue B export-led growth C repayment of debts to other countries D the import of new technology

1 marks

Answer: D

This question in 9708/32 Feb/March 2025

25 Which components are included in the current account and financial account of the balance of payments? current account financial account A official reserve assets and trade in services and transactions trade in goods in official reserve assets B primary income and official reserve assets and trade in goods secondary income C trade in goods and foreign direct investment and trade in services secondary income D trade in services and portfolio investment and secondary income official reserve assets

1 marks

Answer: D

This question in 9708/32 Feb/March 2025