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Topical›Economics 0455›International trade and globalisation›Current account of balance of payments›Paper 1

Current account of balance of payments — Paper 1 · IGCSE Economics 0455

6.4· 148 questions · 148 marks · 178 min · 2006–2025· Multiple choice

Every Cambridge IGCSE Economics Paper 1 question on current account of balance of payments, laid out as 38 A4 pages with the mark scheme below. Nothing is left out. Free to read, no account.

QuestionsMark scheme
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Questions38 pages

Question 1: What would not be recorded in the current account of Argentina’s balance of payments? A An Argentine company builds a factory in Kenya. B A…Question 2: A country has a surplus on its trade in goods and services of $20 m and a deficit on its current account of $10 m. What position on its cur…Question 3: Many people in Zimbabwe want to buy foreign cars, which would be shipped by foreign companies. What happens if the Zimbabwe government remo…Question 4: A country imports oil which is used in the production and distribution of goods. The country has also experienced a rise in incomes which h…1 / 38
Question 5: The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars. 0 1 2 3 4 5 Exports 1999 2003 Imports What happened t…Question 6: A government decreased the tax on all goods produced in a country. What is the most likely result of this? A a decrease in imports B a decr…Question 7: A government decreased the tax on all goods imported into the country. What is the most likely result of this? A a decrease in domestic pro…Question 8: A large amount of the agricultural products in a country were damaged by floods. What is likely to have happened to the price of agricultur…2 / 38
Question 9: The table shows a number of economic indicators for four countries in 2004. Which country best fits the description of ‘the fastest real ec…Question 10: Which two items, as well as trade in goods and services, are included in the current account of the balance of payments? A foreign reserves…Question 11: There was an increase in the value of the United States (US) dollar against the South African Rand. What is a result of this? A an increase…Question 12: In September 2008, the Chinese government increased the sales tax on cars with large engines whilst it reduced the sales tax on cars with s…Question 13: What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transpo…3 / 38
Question 14: In September 2008, the Chinese government increased the sales tax on cars with large engines whilst it reduced the sales tax on cars with s…Question 15: What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transpo…Question 16: In September 2008, the Chinese government increased the sales tax on cars with large engines whilst it reduced the sales tax on cars with s…Question 17: What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transpo…4 / 38
Question 18: The diagrams show the composition of exports and imports of a country. Exports Imports goods services goods services 50 % 50 % 60 % 40 % to…Question 19: A government may use customs barriers to restrict free trade. What is an economic reason for doing this? A to discourage the production of …5 / 38
Question 20: The diagrams show the composition of exports and imports of a country. Exports Imports goods services goods services 50 % 50 % 60 % 40 % to…Question 21: A government may use customs barriers to restrict free trade. What is an economic reason for doing this? A to discourage the production of …6 / 38
Question 22: The diagrams show the composition of exports and imports of a country. Exports Imports goods services goods services 50 % 50 % 60 % 40 % to…Question 23: Many sportsmen and sportswomen from developing countries go to the United States (US) to earn money, most of which they send back to their …Question 24: Many sportsmen and sportswomen from developing countries go to the United States (US) to earn money, most of which they send back to their …Question 25: Many sportsmen and sportswomen from developing countries go to the United States (US) to earn money, most of which they send back to their …7 / 38
Question 26: The diagram shows the value of exports and imports of goods of a country in five years. 30 25 key 20 exports $m 15 imports 10 5 0 1 2 3 4 5…Question 27: A government removed the quota on goods imported into the country. What is the most likely result of this? A a decrease in demand for domes…Question 28: The table shows the exchange rate of the pound (£) in US dollars ($) and the UK Balance of Payments on current account from 1998 to 2001. U…8 / 38
Question 29: A government removed the quota on goods imported into the country. What is the most likely result of this? A a decrease in demand for domes…Question 30: The table shows the exchange rate of the pound (£) in US dollars ($) and the UK Balance of Payments on current account from 1998 to 2001. U…Question 31: A government agreed to provide $20 million to a developing country to help supply emergency aid. In which part of the current account of th…Question 32: A government agreed to provide $20 million to a developing country to help supply emergency aid. In which part of the current account of th…9 / 38
Question 33: In some Asian countries the cost of labour is lower than in developed countries. As a result they manufacture and export clothes to Europe,…Question 34: A country imports oil, which has risen in price and which is used for production and for distribution. There has also been an increase in u…Question 35: Which of the following is an export of Jamaica? A a loan to Jamaica by the International Monetary Fund B Jamaican holidays taken by Ameri…Question 36: Which of the following is an export of Jamaica? A a loan to Jamaica by the International Monetary Fund B Jamaican holidays taken by Ameri…Question 37: Which of the following is an export of Jamaica? A a loan to Jamaica by the International Monetary Fund B Jamaican holidays taken by Ameri…10 / 38
Question 38: Governments aim to encourage stable prices because inflation can result in a current account deficit on the balance of payments. How does h…Question 39: In 2012 the UK held the Olympic Games which attracted a large number of visitors from foreign countries. Which item of the UK’s current acc…Question 40: The table shows the values of the items in a country’s current account in two years. year 1 year 2 item ($m) ($m) balance of goods and serv…Question 41: Governments aim to encourage stable prices because inflation can result in a current account deficit on the balance of payments. How does h…11 / 38
Question 42: In 2012 the UK held the Olympic Games which attracted a large number of visitors from foreign countries. Which item of the UK’s current acc…Question 43: In recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an incr…Question 44: When the US$ exchange rate falls it will usually A help to reduce a US trade deficit. B increase the foreign price of US exports. C reduce …Question 45: When the US$ exchange rate falls it will usually A help to reduce a US trade deficit. B increase the foreign price of US exports. C reduce …Question 46: In recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an incr…12 / 38
Question 47: The table shows the trade in goods balance and the current account balance of the balance of payments for four countries during a year. Whi…Question 48: The table shows information on the trading position of four major economies in 2013. Which country had the strongest trading position? curr…Question 49: The table shows the trade in goods balance and the current account balance of the balance of payments for four countries during a year. Whi…13 / 38
Question 50: The table shows the trade in goods balance and the current account balance of the balance of payments for four countries during a year. Whi…Question 51: The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars. 0 1 2 3 4 5 Exports 1999 2003 Imports With reference …Question 52: The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars. 0 1 2 3 4 5 Exports 1999 2003 Imports With reference …Question 53: What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transpo…14 / 38
Question 54: It has been suggested that all countries producing arms should ban the export of weapons and cut production in order to reduce the risk of …Question 55: 70% of the 10 million kilograms of tea produced in India is exported. The UK, Japan, and Germany buy the most. Wholesale prices rose 10% in…Question 56: What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transpo…Question 57: It has been suggested that all countries producing arms should ban the export of weapons and cut production in order to reduce the risk of …Question 58: What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transpo…15 / 38
Question 59: It has been suggested that all countries producing arms should ban the export of weapons and cut production in order to reduce the risk of …Question 60: A government removed the quota on goods imported into the country. What is the most likely result of this? A a decrease in demand for domes…Question 61: The table shows components of Japan’s current account balance in trillion Yen for 2011 and 2012. balance of balance of balance of balance o…Question 62: A government removed the quota on goods imported into the country. What is the most likely result of this? A a decrease in demand for domes…16 / 38
Question 63: The table shows details of India’s current account of the balance of payments in the 1st quarter of 2014. $ billion trade in goods (visible…Question 64: In recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an incr…Question 65: In 2015, China was the world’s largest exporter of manufactured goods and a major importer of oil and minerals. China devalued the yuan (re…Question 66: In 2010, Vietnam experienced a deficit in the value of its trade in goods (visible) despite exporting a greater number of goods than it imp…17 / 38
Question 67: An economy has a deficit on its balance of trade in manufactured goods. Which government policy will reduce this deficit? A a decrease in s…Question 68: What is a country said to have if the value of its exported goods exceeds the value of its imported goods? A a surplus on its balance of pa…Question 69: It was reported in 2011 that the United States (US) needed to achieve a lower current account deficit. What would help this in the short ru…Question 70: A developing economy has a surplus on its trade in goods of $75 billion and a deficit on its trade in services of $25 billion, while its cu…Question 71: 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 ac…18 / 38
Question 72: 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 ac…Question 73: 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 ac…Question 74: The table refers to a country’s balance of payments on current account. $bn goods exports 100 goods imports 125 services exports 60 service…Question 75: What is most likely to happen if South Korea builds a factory in Switzerland that becomes profitable? A South Korea’s imports of goods will…19 / 38
Question 76: 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 resu…Question 77: What is most likely to happen if South Korea builds a factory in Switzerland that becomes profitable? A South Korea’s imports of goods will…Question 78: A country has experienced a devaluation of its currency. What are the likely results of the devaluation? imports exports A price decreases …Question 79: What is most likely to happen if South Korea builds a factory in Switzerland that becomes profitable? A South Korea’s imports of goods will…Question 80: 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 bi…20 / 38
Question 81: Which measure would a government take to reduce a current account deficit? A increase tariffs B increase value added tax C reduce income ta…Question 82: The table shows a country’s balance of payments that has no secondary income (current transfers). item $ million exports of goods 280 impor…Question 83: The US government decides to reduce the size of the quota on a good it buys from China. What is likely to happen? A The good will become ch…Question 84: A large amount of the agricultural products in a country were damaged by floods. What is likely to have happened to the price of agricultur…21 / 38
Question 85: Changes in the foreign exchange rate of a country resulted in a depreciation of its currency. What is not likely to happen? A The costs of …Question 86: Which item will register as an outflow on the services section of the current account of the US balance of payments? A money paid by chemic…Question 87: What would cause a favourable change in the Kenyan trade in services (invisible) account? A A Kenyan company wins a contract to transport e…Question 88: The table shows the current account balance for four countries in 2016. It also shows each country’s exchange rate against the US dollar fo…Question 89: What would cause a favourable change in the Kenyan trade in services (invisible) account? A A Kenyan company wins a contract to transport e…22 / 38
Question 90: What would cause a rise in the deficit on the current account of the balance of payments? A a fall in foreign direct investment into the co…Question 91: What would cause a favourable change in the Kenyan trade in services (invisible) account? A A Kenyan company wins a contract to transport e…Question 92: The table shows a selection of economic data for a country. $ m primary income (net income transfers) 1000 secondary income (net current tr…Question 93: What is included as part of the current account of the balance of payments? A all government income and expenditure B money withdrawn from …23 / 38
Question 94: The table shows components of Japan’s current account balance in trillion Yen (¥) for 2011 and 2012. balance of balance of balance of balan…Question 95: The table shows components of Japan’s current account balance in trillion Yen (¥) for 2011 and 2012. balance of balance of balance of balan…Question 96: Which change will not increase a surplus on the current account of the balance of payments of a country? A a decrease in the value of impor…Question 97: An economy with a floating exchange rate experiences an increased deficit on the current account of the balance of payments. What will resu…24 / 38
Question 98: The table shows components of Japan’s current account balance in trillion Yen (¥) for 2011 and 2012. balance of balance of balance of balan…Question 99: 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…Question 100: The table shows information from a country’s current account of its balance of payments. $ billion exports of goods 20 imports of goods 24 …25 / 38
Question 101: The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goo…Question 102: A country wishes to increase a current account surplus on the balance of payments. Which action would it take? A abolish an import quota B …Question 103: The table shows a country’s exports and imports. $m exports of goods 200 imports of goods 190 exports of services 35 imports of services 38…26 / 38
Question 104: The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goo…Question 105: What would not be included in the current account of the balance of payments? A dividends earned from a firm in another country B imports o…Question 106: The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goo…Question 107: A country has a current account deficit on its balance of payments. Which measure is most likely to reduce the deficit? A a cut in interest…27 / 38
Question 108: A country experienced a deficit on each of its trade in goods, primary income and secondary income. Overall, it had a surplus on the curren…Question 109: A country has a deficit on its current account of its balance of payments. What could increase the size of its deficit? A increased exports…Question 110: What may result from a balance of payments trade surplus? A The exchange rate appreciates and causes export prices to fall. B The exchange …Question 111: A country has a deficit on its current account of its balance of payments. What could increase the size of its deficit? A increased exports…Question 112: A country has a deficit on its current account of its balance of payments. What could increase the size of its deficit? A increased exports…28 / 38
Question 113: The diagram shows China’s trade with Brazil for two years. China’s exports key year 1 China’s imports year 2 0 1 2 3 4 5 $ billion What hap…Question 114: The diagram shows China’s trade with Brazil for two years. China’s exports key year 1 China’s imports year 2 0 1 2 3 4 5 $ billion What hap…Question 115: The diagram shows China’s trade with Brazil for two years. China’s exports key year 1 China’s imports year 2 0 1 2 3 4 5 $ billion What hap…29 / 38
Question 116: What is a reason for trade protection? A to reduce a deficit on the current account of the balance of payments B to reduce a surplus on the…Question 117: What is an immediate effect for a country of a fall in its foreign exchange rate? A a fall in the money supply B an increase in purchasing …Question 118: What is most likely to result from a reduction in the value of a country’s currency if there are no other changes in the economy? A A trade…Question 119: A country has a surplus on the current account of its balance of payments. What would be most likely to cause the country to move into defi…Question 120: The table shows some details from a country’s balance of payments that has no secondary income (current transfers). item $ million exports …30 / 38
Question 121: Vietnamese companies buy insurance from companies in the US. How will this transaction be recorded in the Vietnamese balance of payments? s…Question 122: The table shows some details from a country’s balance of payments. The country has no secondary income (current transfers). item $ million …Question 123: Vietnamese companies buy insurance from companies in the US. How will this transaction be recorded in the Vietnamese balance of payments? s…31 / 38
Question 124: The table shows some details from a country’s balance of payments. The country has no secondary income (current transfers). item $ million …Question 125: Vietnamese companies buy insurance from companies in the US. How will this transaction be recorded in the Vietnamese balance of payments? s…Question 126: What is an advantage of a floating exchange rate for an economy? A It can correct a current account deficit or surplus. B It creates certai…Question 127: The table shows information from a country’s current account of its balance of payments. $ billion exports of goods 20 imports of goods 24 …32 / 38
Question 128: Which policy measure is most likely to reduce the current account deficit of the balance of payments of an economy? A decrease the level of…Question 129: The table shows a country’s exports and imports. $m exports of goods 200 imports of goods 190 exports of services 35 imports of services 38…Question 130: Country X has a persistent deficit on the current account of the balance payments. Which policy measure is most likely to improve this situ…Question 131: What is the correct formula for calculating the current account of the balance of payments? A balance of trade in goods + balance of trade …33 / 38
Question 132: Many European firms employ workers from the Philippines. These workers send part of their income to relatives in the Philippines. In which …Question 133: What is measured in the secondary income balance in a country’s current account of the balance of payments? A net contributions to internat…Question 134: What is included in the primary income component on the current account of the balance of payments? A dividends and interest from investmen…Question 135: The table shows the average exchange rate of the UK pound (£) to the US dollar ($), that is the amount of $ that can be bought with £1. exc…34 / 38
Question 136: The table shows components of Japan’s current account balance in trillion yen (¥) for 2 years. balance of balance of balance of balance of …Question 137: The diagram shows China’s trade with Brazil for two years. China’s exports key year 1 China’s imports year 2 0 1 2 3 4 5 $ billion What hap…Question 138: What is the most likely cause of an increased current account surplus in a country? A lower prices for the country’s exports B higher excha…35 / 38
Question 139: The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goo…Question 140: Country X records these selected items in the current account of its balance of payments. • Country X exports $200m of goods. • Country X i…Question 141: A government wishes to reduce the surplus on the current account of its balance of payments. Which policy is likely to achieve this? A cutt…36 / 38
Question 142: The table shows the values of the items in a country’s current account in two years. year 1 year 2 item ($m) ($m) balance of goods and −30 …Question 143: What is a consequence of a surplus on the current account of the balance of payments? A a decrease in GDP B a decrease in unemployment C a …Question 144: The table shows a selection of economic data for a country. $m primary income 1000 secondary income –500 total value of exported goods 1000…Question 145: What is most likely to directly result from a persistent and large current account surplus on the balance of payments of a country? A a low…37 / 38
Question 146: Which combination of changes in export revenue and import expenditure is most likely to cause a country’s exchange rate to depreciate? expo…Question 147: A government wishes to reduce the deficit on the current account of its balance of payments. Which policy should it adopt? A increase subsi…Question 148: What is a likely government policy to reduce a deficit on the current account of the balance of payments? A increasing the value of the for…38 / 38

Mark scheme148 answers

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Pastlit

Economics 0455 · Current account of balance of payments — Paper 1

IGCSE · topical answer key — answer key (teacher use)

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1A1
2C1
3D1
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6A1
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Economics 0455 · Current account of balance of payments — Paper 1

IGCSE · topical answer key — answer key (teacher use)

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Marks

50D1
51D1
52D1
53D1
54C1
55B1
56D1
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59C1
60—1
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62A1
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Economics 0455 · Current account of balance of payments — Paper 1

IGCSE · topical answer key — answer key (teacher use)

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99C1
100D1
101C1
102B1
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104C1
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106C1
107C1
108B1
109D1
110B1
111D1
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Economics 0455 · Current account of balance of payments — Paper 1

IGCSE · topical answer key — answer key (teacher use)

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148B1
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Q1 · What would not be recorded in the current account of Argentina’s balance of payments? 0455/11 Oct/Nov 2006

28 What would not be recorded in the current account of Argentina’s balance of payments? A An Argentine company builds a factory in Kenya. B An Argentine insurance company insures an American ship. C Argentine beef is sold to South Africa. D A large group of Italians visit Argentina.

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2006

Q2 · A country has a surplus on its trade in goods and services of $20 m and a deficit on its… 0455/11 Oct/Nov 2006

29 A country has a surplus on its trade in goods and services of $20 m and a deficit on its current account of $10 m. What position on its current income balance and current transfer balance is consistent with this? current income balance current transfer balance ($m) ($m) A +20 +10 B +10 –30 C –10 –20 D –20 +10

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2006

Q3 · Many people in Zimbabwe want to buy foreign cars, which would be shipped by foreign… 0455/11 Oct/Nov 2006

38 Many people in Zimbabwe want to buy foreign cars, which would be shipped by foreign companies. What happens if the Zimbabwe government removes the quota on the import of motor cars? balance on trade in balance on trade in goods services A improves no change B improves worsens C worsens no change D worsens worsens

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2006

Q4 · A country imports oil which is used in the production and distribution of goods 0455/11 Oct/Nov 2007

13 A country imports oil which is used in the production and distribution of goods. The country has also experienced a rise in incomes which has resulted in a large increase in the demand for goods, some of which it imports. What is likely to happen to the country’s balance of trade in goods and to the price of oil? balance of trade in price of oil goods A worsens falls B improves falls C worsens rises D improves rises

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2007

Q5 · The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars 0455/11 Oct/Nov 2007

31 The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars. 0 1 2 3 4 5 Exports 1999 2003 Imports What happened to China’s trade balance with Brazil between 1999 and 2003? A It experienced a falling surplus. B It experienced a rising deficit. C It moved from deficit to surplus. D It moved from surplus to deficit.

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2007

Q6 · A government decreased the tax on all goods produced in a country 0455/11 May/June 2008

30 A government decreased the tax on all goods produced in a country. What is the most likely result of this? A a decrease in imports B a decrease in industrial production C a decrease in real incomes D a deterioration in the balance of trade in goods

1 marks

Answer: A

This question in 0455/11 May/June 2008

Q7 · A government decreased the tax on all goods imported into the country 0455/11 May/June 2009

19 A government decreased the tax on all goods imported into the country. What is the most likely result of this? A a decrease in domestic production B an increase in economic growth C an increase in exports D an improvement in the balance of trade in goods

1 marks

Answer: A

This question in 0455/11 May/June 2009

Q8 · A large amount of the agricultural products in a country were damaged by floods 0455/11 May/June 2009

29 A large amount of the agricultural products in a country were damaged by floods. What is likely to have happened to the price of agricultural products and the volume of imports of agricultural products? price of products volume of imports A fall fall B fall rise C rise fall D rise rise

1 marks

Answer: D

This question in 0455/11 May/June 2009

Q9 · The table shows a number of economic indicators for four countries in 2004 0455/11 Oct/Nov 2009

23 The table shows a number of economic indicators for four countries in 2004. Which country best fits the description of ‘the fastest real economic growth with the strongest international position’? GDP prices trade balance foreign reserves country (annual % change) (annual % change) ($bn) ($bn) A Chile 4.8 1.1 +6.2 15.9 B Hungary 4.2 7.5 – 4.2 12.6 C Peru 4.2 4.3 +1.5 10.4 D Philippines 6.4 5.1 –1.3 13.0

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2009

Q10 · Which two items, as well as trade in goods and services, are included in the current… 0455/11 Oct/Nov 2009

29 Which two items, as well as trade in goods and services, are included in the current account of the balance of payments? A foreign reserves and international investment B government spending and international borrowing C incomes and current transfers D taxation and foreign aid

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2009

Q11 · There was an increase in the value of the United States (US) dollar against the South… 0455/12 May/June 2010

30 There was an increase in the value of the United States (US) dollar against the South African Rand. What is a result of this? A an increase in the number of exports from the US to South Africa B an increase in the number of imports to the US from South Africa C fewer people from the US spend holidays in South Africa D more people from South Africa spend holidays in the US

1 marks

Answer: B

This question in 0455/12 May/June 2010

Q12 · In September 2008, the Chinese government increased the sales tax on cars with large… 0455/11 Oct/Nov 2010

22 In September 2008, the Chinese government increased the sales tax on cars with large engines whilst it reduced the sales tax on cars with small engines. Most cars in China with large engines are imported whilst most cars with small engines are home produced. Which effects would the changes in sales tax be expected to have on China’s trade surplus and the demand for home produced cars? demand for home trade surplus produced cars A increase increase B increase reduce C reduce increase D reduce reduce

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2010

Q13 · What might cause the balance on the current account of Mauritius to improve? 0455/11 Oct/Nov 2010

30 What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transport of Mauritian goods in Portuguese ships C increased spending by Mauritians on holidays in Goa D increased spending by tourists in Mauritian hotels

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2010

Q14 · In September 2008, the Chinese government increased the sales tax on cars with large… 0455/12 Oct/Nov 2010

19 In September 2008, the Chinese government increased the sales tax on cars with large engines whilst it reduced the sales tax on cars with small engines. Most cars in China with large engines are imported whilst most cars with small engines are home produced. Which effects would the changes in sales tax be expected to have on China’s trade surplus and the demand for home produced cars? demand for home trade surplus produced cars A increase increase B increase reduce C reduce increase D reduce reduce

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2010

Q15 · What might cause the balance on the current account of Mauritius to improve? 0455/12 Oct/Nov 2010

29 What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transport of Mauritian goods in Portuguese ships C increased spending by Mauritians on holidays in Goa D increased spending by tourists in Mauritian hotels

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2010

Q16 · In September 2008, the Chinese government increased the sales tax on cars with large… 0455/13 Oct/Nov 2010

20 In September 2008, the Chinese government increased the sales tax on cars with large engines whilst it reduced the sales tax on cars with small engines. Most cars in China with large engines are imported whilst most cars with small engines are home produced. Which effects would the changes in sales tax be expected to have on China’s trade surplus and the demand for home produced cars? demand for home trade surplus produced cars A increase increase B increase reduce C reduce increase D reduce reduce

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2010

Q17 · What might cause the balance on the current account of Mauritius to improve? 0455/13 Oct/Nov 2010

30 What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transport of Mauritian goods in Portuguese ships C increased spending by Mauritians on holidays in Goa D increased spending by tourists in Mauritian hotels

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2010

Q18 · The diagrams show the composition of exports and imports of a country 0455/11 May/June 2011

29 The diagrams show the composition of exports and imports of a country. Exports Imports goods services goods services 50 % 50 % 60 % 40 % total exports $120 million total imports $100 million What is true for this country? A There was a deficit in the balance of trade in goods. B There was a deficit in the balance of trade in services. C There was a surplus in the balance of trade in goods. D There was a surplus in the balance of trade in services.

1 marks

Answer: D

This question in 0455/11 May/June 2011

Q19 · A government may use customs barriers to restrict free trade 0455/11 May/June 2011

30 A government may use customs barriers to restrict free trade. What is an economic reason for doing this? A to discourage the production of strategic goods B to improve the balance of trade C to increase a balance of payments deficit D to make imports cheaper

1 marks

Answer: B

This question in 0455/11 May/June 2011

Q20 · The diagrams show the composition of exports and imports of a country 0455/12 May/June 2011

30 The diagrams show the composition of exports and imports of a country. Exports Imports goods services goods services 50 % 50 % 60 % 40 % total exports $120 million total imports $100 million What is true for this country? A There was a deficit in the balance of trade in goods. B There was a deficit in the balance of trade in services. C There was a surplus in the balance of trade in goods. D There was a surplus in the balance of trade in services.

1 marks

Answer: D

This question in 0455/12 May/June 2011

Q21 · A government may use customs barriers to restrict free trade 0455/13 May/June 2011

29 A government may use customs barriers to restrict free trade. What is an economic reason for doing this? A to discourage the production of strategic goods B to improve the balance of trade C to increase a balance of payments deficit D to make imports cheaper

1 marks

Answer: B

This question in 0455/13 May/June 2011

Q22 · The diagrams show the composition of exports and imports of a country 0455/13 May/June 2011

30 The diagrams show the composition of exports and imports of a country. Exports Imports goods services goods services 50 % 50 % 60 % 40 % total exports $120 million total imports $100 million What is true for this country? A There was a deficit in the balance of trade in goods. B There was a deficit in the balance of trade in services. C There was a surplus in the balance of trade in goods. D There was a surplus in the balance of trade in services.

1 marks

Answer: D

This question in 0455/13 May/June 2011

Q23 · Many sportsmen and sportswomen from developing countries go to the United States (US) to… 0455/11 Oct/Nov 2011

29 Many sportsmen and sportswomen from developing countries go to the United States (US) to earn money, most of which they send back to their own countries. What impact would this have on the Balance of Payments? A The current account balance of the developing countries would improve. B The current account balance of the US would improve. C The trade balance of the developing countries would improve. D The trade balance of the US would improve.

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2011

Q24 · Many sportsmen and sportswomen from developing countries go to the United States (US) to… 0455/12 Oct/Nov 2011

26 Many sportsmen and sportswomen from developing countries go to the United States (US) to earn money, most of which they send back to their own countries. What impact would this have on the Balance of Payments? A The current account balance of the developing countries would improve. B The current account balance of the US would improve. C The trade balance of the developing countries would improve. D The trade balance of the US would improve.

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2011

Q25 · Many sportsmen and sportswomen from developing countries go to the United States (US) to… 0455/13 Oct/Nov 2011

27 Many sportsmen and sportswomen from developing countries go to the United States (US) to earn money, most of which they send back to their own countries. What impact would this have on the Balance of Payments? A The current account balance of the developing countries would improve. B The current account balance of the US would improve. C The trade balance of the developing countries would improve. D The trade balance of the US would improve.

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2011

Q26 · The diagram shows the value of exports and imports of goods of a country in five years 0455/11 May/June 2012

30 The diagram shows the value of exports and imports of goods of a country in five years. 30 25 key 20 exports $m 15 imports 10 5 0 1 2 3 4 5 year Between which two years did the country have an increase in the value of imports and an improvement in its trade balance? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5

1 marks

Answer: C

This question in 0455/11 May/June 2012

Q27 · A government removed the quota on goods imported into the country 0455/12 May/June 2012

29 A government removed the quota on goods imported into the country. What is the most likely result of this? A a decrease in demand for domestic production B a decrease in domestic unemployment C a decrease in exports D a decrease in the balance of trade deficit

1 marks

Answer: A

This question in 0455/12 May/June 2012

Q28 · The table shows the exchange rate of the pound (£) in US dollars ($) and the UK Balance… 0455/12 May/June 2012

30 The table shows the exchange rate of the pound (£) in US dollars ($) and the UK Balance of Payments on current account from 1998 to 2001. UK current number of US year account $ for each £ £m 1998 1.65 –4 814 1999 1.61 –19 729 2000 1.51 –19 208 2001 1.44 –20 453 Which of the following correctly describes these trends between 1998 and 2001? value of £ current account in terms of US $ A appreciating improving B appreciating worsening C depreciating improving D depreciating worsening

1 marks

Answer: D

This question in 0455/12 May/June 2012

Q29 · A government removed the quota on goods imported into the country 0455/13 May/June 2012

29 A government removed the quota on goods imported into the country. What is the most likely result of this? A a decrease in demand for domestic production B a decrease in domestic unemployment C a decrease in exports D a decrease in the balance of trade deficit

1 marks

Answer: A

This question in 0455/13 May/June 2012

Q30 · The table shows the exchange rate of the pound (£) in US dollars ($) and the UK Balance… 0455/13 May/June 2012

30 The table shows the exchange rate of the pound (£) in US dollars ($) and the UK Balance of Payments on current account from 1998 to 2001. UK current number of US year account $ for each £ £m 1998 1.65 –4 814 1999 1.61 –19 729 2000 1.51 –19 208 2001 1.44 –20 453 Which of the following correctly describes these trends between 1998 and 2001? value of £ current account in terms of US $ A appreciating improving B appreciating worsening C depreciating improving D depreciating worsening

1 marks

Answer: D

This question in 0455/13 May/June 2012

Q31 · A government agreed to provide $20 million to a developing country to help supply… 0455/11 Oct/Nov 2012

23 A government agreed to provide $20 million to a developing country to help supply emergency aid. In which part of the current account of the balance of payments was this payment recorded? A current transfer flows B income flows C trade in goods D trade in services

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2012

Q32 · A government agreed to provide $20 million to a developing country to help supply… 0455/12 Oct/Nov 2012

29 A government agreed to provide $20 million to a developing country to help supply emergency aid. In which part of the current account of the balance of payments was this payment recorded? A current transfer flows B income flows C trade in goods D trade in services

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2012

Q33 · In some Asian countries the cost of labour is lower than in developed countries 0455/12 Oct/Nov 2012

30 In some Asian countries the cost of labour is lower than in developed countries. As a result they manufacture and export clothes to Europe, where the demand for clothes is high. The quality of these clothes, however, is not as good as some of the clothes produced in Europe. What is likely to happen in the Asian countries and to the total expenditure on clothes in Europe? change in impact in Asian countries expenditure in Europe A capital account will improve increase B current account will improve uncertain C exchange rate will fall uncertain D terms of trade will fall decrease

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2012

Q34 · A country imports oil, which has risen in price and which is used for production and for… 0455/13 Oct/Nov 2012

30 A country imports oil, which has risen in price and which is used for production and for distribution. There has also been an increase in unemployment in the country. Businesses have closed and total consumer demand has fallen. What is likely to happen to the balance of trade and economic growth? balance of trade economic growth A improve likely to increase B uncertain likely to decrease C worsen likely to decrease D worsen likely to increase

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2012

Q35 · Which of the following is an export of Jamaica? 0455/11 Oct/Nov 2013

25 Which of the following is an export of Jamaica? A a loan to Jamaica by the International Monetary Fund B Jamaican holidays taken by American tourists C dividends paid by a company in Jamaica to its American shareholders D sales of Japanese cars in Jamaica

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2013

Q36 · Which of the following is an export of Jamaica? 0455/12 Oct/Nov 2013

30 Which of the following is an export of Jamaica? A a loan to Jamaica by the International Monetary Fund B Jamaican holidays taken by American tourists C dividends paid by a company in Jamaica to its American shareholders D sales of Japanese cars in Jamaica

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2013

Q37 · Which of the following is an export of Jamaica? 0455/13 Oct/Nov 2013

30 Which of the following is an export of Jamaica? A a loan to Jamaica by the International Monetary Fund B Jamaican holidays taken by American tourists C dividends paid by a company in Jamaica to its American shareholders D sales of Japanese cars in Jamaica

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2013

Q38 · Governments aim to encourage stable prices because inflation can result in a current… 0455/11 May/June 2014

18 Governments aim to encourage stable prices because inflation can result in a current account deficit on the balance of payments. How does high inflation contribute to a current account deficit? A Countries have to barter manufactured goods for raw materials. B Goods manufactured for export lose their competitiveness. C Numbers of foreign visitors increase. D Spending on imported goods is reduced.

1 marks

Answer: B

This question in 0455/11 May/June 2014

Q39 · In 2012 the UK held the Olympic Games which attracted a large number of visitors from… 0455/11 May/June 2014

29 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 benefitted directly from this event? A export trade in goods B export trade in services C import trade in goods D import trade in services

1 marks

Answer: B

This question in 0455/11 May/June 2014

Q40 · The table shows the values of the items in a country’s current account in two years 0455/12 May/June 2014

30 The table shows the values of the items in a country’s current account in two years. year 1 year 2 item ($m) ($m) balance of goods and services –30 0 net income –30 –20 net transfers ? ? balance of current account –50 +10 How did the value of the net transfers change between year 1 and year 2? A decreased by $10m B decreased by $20m C increased by $20m D increased by $30m

1 marks

Answer: C

This question in 0455/12 May/June 2014

Q41 · Governments aim to encourage stable prices because inflation can result in a current… 0455/13 May/June 2014

21 Governments aim to encourage stable prices because inflation can result in a current account deficit on the balance of payments. How does high inflation contribute to a current account deficit? A Countries have to barter manufactured goods for raw materials. B Goods manufactured for export lose their competitiveness. C Numbers of foreign visitors increase. D Spending on imported goods is reduced.

1 marks

Answer: B

This question in 0455/13 May/June 2014

Q42 · In 2012 the UK held the Olympic Games which attracted a large number of visitors from… 0455/13 May/June 2014

25 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 benefitted directly from this event? A export trade in goods B export trade in services C import trade in goods D import trade in services

1 marks

Answer: B

This question in 0455/13 May/June 2014

Q43 · In recent years, the US has experienced a deficit on its overall current account of the… 0455/11 Oct/Nov 2014

29 In recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an increase in the size of the deficit? A increased competitiveness of goods made in the US B increased earnings by US investors in foreign companies C increased numbers of overseas visitors to the US D increased spending on US military bases abroad

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2014

Q44 · When the US$ exchange rate falls it will usually A help to reduce a US trade deficit 0455/11 Oct/Nov 2014

30 When the US$ exchange rate falls it will usually A help to reduce a US trade deficit. B increase the foreign price of US exports. C reduce the price of US imports. D reduce US inflation.

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2014

Q45 · When the US$ exchange rate falls it will usually A help to reduce a US trade deficit 0455/12 Oct/Nov 2014

28 When the US$ exchange rate falls it will usually A help to reduce a US trade deficit. B increase the foreign price of US exports. C reduce the price of US imports. D reduce US inflation.

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2014

Q46 · In recent years, the US has experienced a deficit on its overall current account of the… 0455/12 Oct/Nov 2014

30 In recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an increase in the size of the deficit? A increased competitiveness of goods made in the US B increased earnings by US investors in foreign companies C increased numbers of overseas visitors to the US D increased spending on US military bases abroad

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2014

Q47 · The table shows the trade in goods balance and the current account balance of the balance… 0455/11 May/June 2015

30 The table shows the trade in goods balance and the current account balance of the balance of payments for four countries during a year. Which country had the largest surplus on its trade in services, assuming no other transfers or income flows? trade in goods current account country balance balance ($ billion) ($ billion) A Hong Kong 6.2 6.2 B Indonesia 4.4 4.3 C Mexico 7.8 7.6 D Singapore 5.3 5.4

1 marks

Answer: D

This question in 0455/11 May/June 2015

Q48 · The table shows information on the trading position of four major economies in 2013 0455/12 May/June 2015

29 The table shows information on the trading position of four major economies in 2013. Which country had the strongest trading position? current account currency unit country balance % of GDP per US $ (US $ billion) A China +211.7 +1.9 6.12 B Germany +246.0 +6.4 0.75 C Japan +54.1 +1.0 79.4 D UK –96.7 –2.8 0.64

1 marks

Answer: B

This question in 0455/12 May/June 2015

Q49 · The table shows the trade in goods balance and the current account balance of the balance… 0455/12 May/June 2015

30 The table shows the trade in goods balance and the current account balance of the balance of payments for four countries during a year. Which country had the largest surplus on its trade in services, assuming no other transfers or income flows? trade in goods current account country balance balance ($ billion) ($ billion) A Hong Kong 6.2 6.2 B Indonesia 4.4 4.3 C Mexico 7.8 7.6 D Singapore 5.3 5.4

1 marks

Answer: D

This question in 0455/12 May/June 2015

Q50 · The table shows the trade in goods balance and the current account balance of the balance… 0455/13 May/June 2015

30 The table shows the trade in goods balance and the current account balance of the balance of payments for four countries during a year. Which country had the largest surplus on its trade in services, assuming no other transfers or income flows? trade in goods current account country balance balance ($ billion) ($ billion) A Hong Kong 6.2 6.2 B Indonesia 4.4 4.3 C Mexico 7.8 7.6 D Singapore 5.3 5.4

1 marks

Answer: D

This question in 0455/13 May/June 2015

Q51 · The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars 0455/11 Oct/Nov 2015

27 The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars. 0 1 2 3 4 5 Exports 1999 2003 Imports With reference to the diagram, what happened to China’s trade balance with Brazil between 1999 and 2003? A It experienced a falling surplus. B It experienced a rising deficit. C It moved from deficit to surplus. D It moved from surplus to deficit.

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2015

Q52 · The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars 0455/12 Oct/Nov 2015

27 The diagram shows China’s trade with Brazil for 1999 and 2003 in billions of dollars. 0 1 2 3 4 5 Exports 1999 2003 Imports With reference to the diagram, what happened to China’s trade balance with Brazil between 1999 and 2003? A It experienced a falling surplus. B It experienced a rising deficit. C It moved from deficit to surplus. D It moved from surplus to deficit.

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2015

Q53 · What might cause the balance on the current account of Mauritius to improve? 0455/11 May/June 2016

27 What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transport of Mauritian goods in Greek ships C increased spending by Mauritians on holidays in South Africa D increased spending by tourists in Mauritian hotels

1 marks

Answer: D

This question in 0455/11 May/June 2016

Q54 · It has been suggested that all countries producing arms should ban the export of weapons… 0455/11 May/June 2016

29 It has been suggested that all countries producing arms should ban the export of weapons and cut production in order to reduce the risk of war. What would happen if this occurred? A The balance of payments on current account of countries exporting weapons would immediately improve. B The price of existing weapons would fall. C There would be a risk of structural unemployment in countries that are major producers of weapons. D There would be no overall effect on the balance of payments as countries would produce their own weapons.

1 marks

Answer: C

This question in 0455/11 May/June 2016

Q55 · 70% of the 10 million kilograms of tea produced in India is exported 0455/11 May/June 2016

30 70% of the 10 million kilograms of tea produced in India is exported. The UK, Japan, and Germany buy the most. Wholesale prices rose 10% in 2013 as supply was restricted because of a strike. How would these circumstances be shown in international trade accounts? A a credit on the goods and services account for Germany B a debit on the goods and services account for Japan C a 10% fall in the balance of the goods and services account for India D a 10% rise in the balance of goods and services account for the UK

1 marks

Answer: B

This question in 0455/11 May/June 2016

Q56 · What might cause the balance on the current account of Mauritius to improve? 0455/12 May/June 2016

27 What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transport of Mauritian goods in Greek ships C increased spending by Mauritians on holidays in South Africa D increased spending by tourists in Mauritian hotels

1 marks

Answer: D

This question in 0455/12 May/June 2016

Q57 · It has been suggested that all countries producing arms should ban the export of weapons… 0455/12 May/June 2016

29 It has been suggested that all countries producing arms should ban the export of weapons and cut production in order to reduce the risk of war. What would happen if this occurred? A The balance of payments on current account of countries exporting weapons would immediately improve. B The price of existing weapons would fall. C There would be a risk of structural unemployment in countries that are major producers of weapons. D There would be no overall effect on the balance of payments as countries would produce their own weapons.

1 marks

Answer: C

This question in 0455/12 May/June 2016

Q58 · What might cause the balance on the current account of Mauritius to improve? 0455/13 May/June 2016

27 What might cause the balance on the current account of Mauritius to improve? A increased purchases of coffee from Kenya B increased transport of Mauritian goods in Greek ships C increased spending by Mauritians on holidays in South Africa D increased spending by tourists in Mauritian hotels

1 marks

Answer: D

This question in 0455/13 May/June 2016

Q59 · It has been suggested that all countries producing arms should ban the export of weapons… 0455/13 May/June 2016

29 It has been suggested that all countries producing arms should ban the export of weapons and cut production in order to reduce the risk of war. What would happen if this occurred? A The balance of payments on current account of countries exporting weapons would immediately improve. B The price of existing weapons would fall. C There would be a risk of structural unemployment in countries that are major producers of weapons. D There would be no overall effect on the balance of payments as countries would produce their own weapons.

1 marks

Answer: C

This question in 0455/13 May/June 2016

Q60 · A government removed the quota on goods imported into the country 0455/12 Oct/Nov 2016

29 A government removed the quota on goods imported into the country. What is the most likely result of this? A a decrease in demand for domestic production B a decrease in domestic unemployment C a decrease in exports D a decrease in the balance of trade deficit

1 marks

This question in 0455/12 Oct/Nov 2016

Q61 · The table shows components of Japan’s current account balance in trillion Yen for 2011… 0455/12 Oct/Nov 2016

30 The table shows components of Japan’s current account balance in trillion Yen for 2011 and 2012. balance of balance of balance of balance of goods year services current transfers income ¥ trillion ¥ trillion ¥ trillion ¥ trillion 2011 –1.61 –1.76 –1.11 14.04 2012 –5.23 –2.33 –1.02 13.55 Which balance improved between 2011 and 2012? A balance of current transfers B balance of goods C balance of income D balance of services

1 marks

This question in 0455/12 Oct/Nov 2016

Q62 · A government removed the quota on goods imported into the country 0455/13 Oct/Nov 2016

29 A government removed the quota on goods imported into the country. What is the most likely result of this? A a decrease in demand for domestic production B a decrease in domestic unemployment C a decrease in exports D a decrease in the balance of trade deficit

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2016

Q63 · The table shows details of India’s current account of the balance of payments in the 1st… 0455/12 Feb/March 2017

27 The table shows details of India’s current account of the balance of payments in the 1st quarter of 2014. $ billion trade in goods (visible) balance –34 trade in services (invisible) balance ? primary income (income) balance –7 secondary income (current transfers) balance 16 current account balance –8 What is the trade in services (invisible) balance? A surplus of $9bn B surplus of $17bn C surplus of $27bn D surplus of $33bn

1 marks

Answer: B

This question in 0455/12 Feb/March 2017

Q64 · In recent years, the US has experienced a deficit on its overall current account of the… 0455/11 May/June 2017

29 In recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an increase in the size of the deficit? A increased competitiveness of goods made in the US B increased earnings by US investors in foreign companies C increased numbers of overseas visitors to the US D increased spending on US military bases abroad

1 marks

Answer: D

This question in 0455/11 May/June 2017

Q65 · In 2015, China was the world’s largest exporter of manufactured goods and a major… 0455/11 May/June 2017

30 In 2015, China was the world’s largest exporter of manufactured goods and a major importer of oil and minerals. China devalued the yuan (renminbi) by 2%. According to economic theory, what would have been a consequence of this devaluation? A China paid less in foreign currencies for imports. B China reduced its demand for oil and minerals. C China’s exports became less competitive. D China’s trading partners improved their balance of trade with China.

1 marks

Answer: B

This question in 0455/11 May/June 2017

Q66 · In 2010, Vietnam experienced a deficit in the value of its trade in goods (visible)… 0455/12 May/June 2017

30 In 2010, Vietnam experienced a deficit in the value of its trade in goods (visible) despite exporting a greater number of goods than it imported. What could explain this? A The average price of its goods imported exceeded the average price of its goods exported. B The average value of its goods exported exceeded the average value of its goods imported. C The country had a deficit on its trade in services. D The country’s government imposed tariffs on imports.

1 marks

Answer: A

This question in 0455/12 May/June 2017

Q67 · An economy has a deficit on its balance of trade in manufactured goods 0455/11 Oct/Nov 2017

17 An economy has a deficit on its balance of trade in manufactured goods. Which government policy will reduce this deficit? A a decrease in subsidies paid to local manufacturers B an increase in interest rates C an increase in sales tax on locally manufactured goods D an introduction of import duties on manufactured goods

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2017

Q68 · What is a country said to have if the value of its exported goods exceeds the value of… 0455/11 Oct/Nov 2017

28 What is a country said to have if the value of its exported goods exceeds the value of its imported goods? A a surplus on its balance of payments B a surplus on its balance of trade C a surplus on its capital account D a surplus on its current account

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2017

Q69 · It was reported in 2011 that the United States (US) needed to achieve a lower current… 0455/12 Oct/Nov 2017

29 It was reported in 2011 that the United States (US) needed to achieve a lower current account deficit. What would help this in the short run? A a protectionist policy B a strong exchange rate C increased private sector spending D investment in the US by multinational firms

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2017

Q70 · A developing economy has a surplus on its trade in goods of $75 billion and a deficit on… 0455/13 Oct/Nov 2017

29 A developing economy has a surplus on its trade in goods of $75 billion and a deficit on its trade in services of $25 billion, while its current account is in overall balance. Which values for net income (primary income) and net transfers (secondary income) result in the current account being in balance? net income net transfers A deficit of $20 billion surplus of $120 billion B deficit of $30 billion deficit of $70 billion C surplus of $35 billion surplus of $15 billion D surplus of $40 billion deficit of $90 billion

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2017

Q71 · In 2012 the UK held the Olympic Games, which attracted a large number of visitors from… 0455/11 May/June 2018

28 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? A export trade in goods B export trade in services C import trade in goods D import trade in services

1 marks

Answer: B

This question in 0455/11 May/June 2018

Q72 · In 2012 the UK held the Olympic Games, which attracted a large number of visitors from… 0455/12 May/June 2018

28 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? A export trade in goods B export trade in services C import trade in goods D import trade in services

1 marks

Answer: B

This question in 0455/12 May/June 2018

Q73 · In 2012 the UK held the Olympic Games, which attracted a large number of visitors from… 0455/13 May/June 2018

28 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? A export trade in goods B export trade in services C import trade in goods D import trade in services

1 marks

Answer: B

This question in 0455/13 May/June 2018

Q74 · The table refers to a country’s balance of payments on current account 0455/13 May/June 2018

29 The table refers to a country’s balance of payments on current account. $bn goods exports 100 goods imports 125 services exports 60 services imports 50 income and transfers balance +10 What can be concluded from the table? A a current account deficit of $5bn B a current account surplus of $5bn C a goods and services deficit of $35bn D a goods and services surplus of $15bn

1 marks

Answer: A

This question in 0455/13 May/June 2018

Q75 · What is most likely to happen if South Korea builds a factory in Switzerland that becomes… 0455/11 Oct/Nov 2018

28 What is most likely to happen if South Korea builds a factory in Switzerland that becomes profitable? A South Korea’s imports of goods will decrease. B South Korea’s investment income will increase. C Switzerland’s trade balance in goods will worsen. D Switzerland’s trade balance in services will improve.

1 marks

Answer: B

This question in 0455/11 Oct/Nov 2018

Q76 · It is estimated that in 2016 the Olympic Games in Rio, Brazil attracted over 600 000… 0455/12 Oct/Nov 2018

27 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 a depreciation of Brazil’s currency B a fall in Brazil’s rate of inflation C an increase in the Brazilian government’s budget deficit D a reduction in Brazil’s deficit on the current account of its balance of payments

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2018

Q77 · What is most likely to happen if South Korea builds a factory in Switzerland that becomes… 0455/12 Oct/Nov 2018

28 What is most likely to happen if South Korea builds a factory in Switzerland that becomes profitable? A South Korea’s imports of goods will decrease. B South Korea’s investment income will increase. C Switzerland’s trade balance in goods will worsen. D Switzerland’s trade balance in services will improve.

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2018

Q78 · A country has experienced a devaluation of its currency 0455/12 Oct/Nov 2018

29 A country has experienced a devaluation of its currency. What are the likely results of the devaluation? imports exports A price decreases value decreases B price decreases value increases C price increases quantity decreases D price increases quantity increases

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2018

Q79 · What is most likely to happen if South Korea builds a factory in Switzerland that becomes… 0455/13 Oct/Nov 2018

28 What is most likely to happen if South Korea builds a factory in Switzerland that becomes profitable? A South Korea’s imports of goods will decrease. B South Korea’s investment income will increase. C Switzerland’s trade balance in goods will worsen. D Switzerland’s trade balance in services will improve.

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2018

Q80 · In July 2015, Australia’s balance of trade with the rest of the world was –2809 billion… 0455/13 Oct/Nov 2018

29 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 deficit improving B deficit worsening C surplus improving D surplus worsening

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2018

Q81 · Which measure would a government take to reduce a current account deficit? 0455/12 Feb/March 2019

16 Which measure would a government take to reduce a current account deficit? A increase tariffs B increase value added tax C reduce income tax D reduce domestic subsidies

1 marks

Answer: A

This question in 0455/12 Feb/March 2019

Q82 · The table shows a country’s balance of payments that has no secondary income (current… 0455/12 Feb/March 2019

29 The table shows a country’s balance of payments that has no secondary income (current transfers). item $ million exports of goods 280 imports of goods 350 exports of services 110 imports of services 60 net primary income – 40 What is the country’s current account balance? A a deficit of $60 million B a deficit of $160 million C a surplus of $20 million D a surplus of $760 million

1 marks

Answer: A

This question in 0455/12 Feb/March 2019

Q83 · The US government decides to reduce the size of the quota on a good it buys from China 0455/11 May/June 2019

27 The US government decides to reduce the size of the quota on a good it buys from China. What is likely to happen? A The good will become cheaper in the US. B The US balance of trade will worsen. C The US government’s revenue will decline. D There will be less of the good imported into the US.

1 marks

Answer: D

This question in 0455/11 May/June 2019

Q84 · A large amount of the agricultural products in a country were damaged by floods 0455/11 May/June 2019

30 A large amount of the agricultural products in a country were damaged by floods. What is likely to have happened to the price of agricultural products and the volume of imports of agricultural products? price of products volume of imports A fall fall B fall rise C rise fall D rise rise

1 marks

Answer: D

This question in 0455/11 May/June 2019

Q85 · Changes in the foreign exchange rate of a country resulted in a depreciation of its… 0455/13 May/June 2019

28 Changes in the foreign exchange rate of a country resulted in a depreciation of its currency. What is not likely to happen? A The costs of imported raw materials will fall. B The country’s export trading position will become more competitive. C The country’s residents will find it more expensive to take holidays abroad. D The current account deficit will be unchanged.

1 marks

Answer: A

This question in 0455/13 May/June 2019

Q86 · Which item will register as an outflow on the services section of the current account of… 0455/13 May/June 2019

29 Which item will register as an outflow on the services section of the current account of the US balance of payments? A money paid by chemical producers in the US for foreign oil B money paid by foreign firms for US cars C money paid by migrant workers in the US to their families overseas D money paid by US tourists visiting attractions in other countries

1 marks

Answer: D

This question in 0455/13 May/June 2019

Q87 · What would cause a favourable change in the Kenyan trade in services (invisible) account? 0455/11 Oct/Nov 2019

27 What would cause a favourable change in the Kenyan trade in services (invisible) account? A A Kenyan company wins a contract to transport exports from Uganda. B A Kenyan tea company increases its exports. C A Kenyan trade delegation promoting coffee sales visits India. D A Zambian company increases its exports to Kenya.

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2019

Q88 · The table shows the current account balance for four countries in 2016 0455/11 Oct/Nov 2019

29 The table shows the current account balance for four countries in 2016. It also shows each country’s exchange rate against the US dollar for 2015 and 2016. Which country had a trade surplus and a strengthened currency against the US dollar? current number of units of currency country account balance against US dollar US$ billion 2016 2015 2016 A Australia –47.9 1.39 1.38 B Belgium +4.8 0.92 0.96 C China +266.6 6.48 6.95 D Taiwan +74.7 32.90 32.00

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2019

Q89 · What would cause a favourable change in the Kenyan trade in services (invisible) account? 0455/12 Oct/Nov 2019

27 What would cause a favourable change in the Kenyan trade in services (invisible) account? A A Kenyan company wins a contract to transport exports from Uganda. B A Kenyan tea company increases its exports. C A Kenyan trade delegation promoting coffee sales visits India. D A Zambian company increases its exports to Kenya.

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2019

Q90 · What would cause a rise in the deficit on the current account of the balance of payments? 0455/12 Oct/Nov 2019

29 What would cause a rise in the deficit on the current account of the balance of payments? A a fall in foreign direct investment into the country B a fall in interest earned on overseas investment by the country C a fall in the value of imported manufactured goods into the country D a rise in the revenue earned from tourism in the country

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2019

Q91 · What would cause a favourable change in the Kenyan trade in services (invisible) account? 0455/13 Oct/Nov 2019

27 What would cause a favourable change in the Kenyan trade in services (invisible) account? A A Kenyan company wins a contract to transport exports from Uganda. B A Kenyan tea company increases its exports. C A Kenyan trade delegation promoting coffee sales visits India. D A Zambian company increases its exports to Kenya.

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2019

Q92 · The table shows a selection of economic data for a country 0455/12 Feb/March 2020

29 The table shows a selection of economic data for a country. $ m primary income (net income transfers) 1000 secondary income (net current transfers) –500 total value of exported goods 1000 total value of imported goods 2000 total value of exported services 800 total value of imported services 200 What is the current account balance of this country? A $100 m B $600 m C $4500 m D $4725 m

1 marks

This question in 0455/12 Feb/March 2020

Q93 · What is included as part of the current account of the balance of payments? 0455/11 May/June 2020

29 What is included as part of the current account of the balance of payments? A all government income and expenditure B money withdrawn from a bank account C investments in other countries by manufacturers D trade in goods and services

1 marks

Answer: D

This question in 0455/11 May/June 2020

Q94 · The table shows components of Japan’s current account balance in trillion Yen (¥) for… 0455/11 May/June 2020

30 The table shows components of Japan’s current account balance in trillion Yen (¥) for 2011 and 2012. balance of balance of balance of balance of goods year services primary income secondary income ¥ trillion ¥ trillion ¥ trillion ¥ trillion 2011 –1.61 –1.76 14.04 –1.11 2012 –5.23 –2.33 13.55 –1.02 Which balance improved between 2011 and 2012? A balance of goods B balance of services C balance of primary income D balance of secondary income

1 marks

Answer: D

This question in 0455/11 May/June 2020

Q95 · The table shows components of Japan’s current account balance in trillion Yen (¥) for… 0455/12 May/June 2020

30 The table shows components of Japan’s current account balance in trillion Yen (¥) for 2011 and 2012. balance of balance of balance of balance of goods year services primary income secondary income ¥ trillion ¥ trillion ¥ trillion ¥ trillion 2011 –1.61 –1.76 14.04 –1.11 2012 –5.23 –2.33 13.55 –1.02 Which balance improved between 2011 and 2012? A balance of goods B balance of services C balance of primary income D balance of secondary income

1 marks

Answer: D

This question in 0455/12 May/June 2020

Q96 · Which change will not increase a surplus on the current account of the balance of… 0455/13 May/June 2020

28 Which change will not increase a surplus on the current account of the balance of payments of a country? A a decrease in the value of imports B a decrease in primary income outflows C an increase in the amount of development aid received D an increase in domestic inflation rates

1 marks

Answer: D

This question in 0455/13 May/June 2020

Q97 · An economy with a floating exchange rate experiences an increased deficit on the current… 0455/13 May/June 2020

29 An economy with a floating exchange rate experiences an increased deficit on the current account of the balance of payments. What will result from this? A an increase in government debt B an increase in its foreign currency reserves C an increase in the demand for its currency on the foreign exchange market D an increase in the supply of its currency on the foreign exchange market

1 marks

Answer: D

This question in 0455/13 May/June 2020

Q98 · The table shows components of Japan’s current account balance in trillion Yen (¥) for… 0455/13 May/June 2020

30 The table shows components of Japan’s current account balance in trillion Yen (¥) for 2011 and 2012. balance of balance of balance of balance of goods year services primary income secondary income ¥ trillion ¥ trillion ¥ trillion ¥ trillion 2011 –1.61 –1.76 14.04 –1.11 2012 –5.23 –2.33 13.55 –1.02 Which balance improved between 2011 and 2012? A balance of goods B balance of services C balance of primary income D balance of secondary income

1 marks

Answer: D

This question in 0455/13 May/June 2020

Q99 · A government is faced with an unwanted deficit on the current account of its balance of… 0455/11 Oct/Nov 2020

27 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? A raising government spending on welfare benefits B reducing income tax C restricting imports by raising tariffs D revaluing its currency

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2020

Q100 · The table shows information from a country’s current account of its balance of payments 0455/11 Oct/Nov 2020

29 The table shows information from a country’s current account of its balance of payments. $ billion exports of goods 20 imports of goods 24 net services +5 net primary income –8 net secondary income –8 What is the country’s current account balance? A +$1 billion B –$4 billion C –$7 billion D –$15 billion

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2020

Q101 · The diagram shows the value of a country’s exports and imports of goods over five years 0455/11 Oct/Nov 2020

30 The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goods 10 5 0 1 2 3 4 5 year 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? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2020

Q102 · A country wishes to increase a current account surplus on the balance of payments 0455/12 Oct/Nov 2020

28 A country wishes to increase a current account surplus on the balance of payments. Which action would it take? A abolish an import quota B increase import tariffs C remove export subsidies D tax export producers

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2020

Q103 · The table shows a country’s exports and imports 0455/12 Oct/Nov 2020

29 The table shows a country’s exports and imports. $m exports of goods 200 imports of goods 190 exports of services 35 imports of services 38 What was the country’s balance of trade in goods and services? A a deficit of $7 million B a deficit of $13 million C a surplus of $7 million D a surplus of $13 million

1 marks

Answer: C

This question in 0455/12 Oct/Nov 2020

Q104 · The diagram shows the value of a country’s exports and imports of goods over five years 0455/12 Oct/Nov 2020

30 The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goods 10 5 0 1 2 3 4 5 year 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? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5

1 marks

Answer: C

This question in 0455/12 Oct/Nov 2020

Q105 · What would not be included in the current account of the balance of payments? 0455/13 Oct/Nov 2020

27 What would not be included in the current account of the balance of payments? A dividends earned from a firm in another country B imports of TVs from another country C purchase of a house in another country D rents paid to owners of land in another country

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2020

Q106 · The diagram shows the value of a country’s exports and imports of goods over five years 0455/13 Oct/Nov 2020

30 The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goods 10 5 0 1 2 3 4 5 year 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? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2020

Q107 · A country has a current account deficit on its balance of payments 0455/12 Feb/March 2021

29 A country has a current account deficit on its balance of payments. Which measure is most likely to reduce the deficit? A a cut in interest rates B a cut in the rate of income tax C a depreciation of the exchange rate D an increase in government expenditure

1 marks

Answer: C

This question in 0455/12 Feb/March 2021

Q108 · A country experienced a deficit on each of its trade in goods, primary income and… 0455/12 Feb/March 2021

30 A country experienced a deficit on each of its trade in goods, primary income and secondary income. Overall, it had a surplus on the current account of its balance of payments. What must this mean? A It had a floating exchange rate. B It had a surplus on its trade in services. C It had a surplus on the government’s budget. D It was a low-income country.

1 marks

Answer: B

This question in 0455/12 Feb/March 2021

Q109 · A country has a deficit on its current account of its balance of payments 0455/11 May/June 2021

30 A country has a deficit on its current account of its balance of payments. What could increase the size of its deficit? A increased exports of its services B increased international competitiveness of its goods C increased numbers of visitors from abroad D increased spending on its military bases abroad

1 marks

Answer: D

This question in 0455/11 May/June 2021

Q110 · What may result from a balance of payments trade surplus? 0455/12 May/June 2021

29 What may result from a balance of payments trade surplus? A The exchange rate appreciates and causes export prices to fall. B The exchange rate appreciates and causes export prices to rise. C The exchange rate depreciates and causes export prices to fall. D The exchange rate depreciates and causes export prices to rise.

1 marks

Answer: B

This question in 0455/12 May/June 2021

Q111 · A country has a deficit on its current account of its balance of payments 0455/12 May/June 2021

30 A country has a deficit on its current account of its balance of payments. What could increase the size of its deficit? A increased exports of its services B increased international competitiveness of its goods C increased numbers of visitors from abroad D increased spending on its military bases abroad

1 marks

Answer: D

This question in 0455/12 May/June 2021

Q112 · A country has a deficit on its current account of its balance of payments 0455/13 May/June 2021

30 A country has a deficit on its current account of its balance of payments. What could increase the size of its deficit? A increased exports of its services B increased international competitiveness of its goods C increased numbers of visitors from abroad D increased spending on its military bases abroad

1 marks

Answer: D

This question in 0455/13 May/June 2021

Q113 · The diagram shows China’s trade with Brazil for two years 0455/11 Oct/Nov 2021

28 The diagram shows China’s trade with Brazil for two years. China’s exports key year 1 China’s imports year 2 0 1 2 3 4 5 $ billion What happened to China’s trade balance with Brazil between year 1 and year 2? A It experienced a falling surplus. B It experienced a rising deficit. C It moved from deficit to surplus. D It moved from surplus to deficit.

1 marks

Answer: D

This question in 0455/11 Oct/Nov 2021

Q114 · The diagram shows China’s trade with Brazil for two years 0455/12 Oct/Nov 2021

28 The diagram shows China’s trade with Brazil for two years. China’s exports key year 1 China’s imports year 2 0 1 2 3 4 5 $ billion What happened to China’s trade balance with Brazil between year 1 and year 2? A It experienced a falling surplus. B It experienced a rising deficit. C It moved from deficit to surplus. D It moved from surplus to deficit.

1 marks

Answer: D

This question in 0455/12 Oct/Nov 2021

Q115 · The diagram shows China’s trade with Brazil for two years 0455/13 Oct/Nov 2021

28 The diagram shows China’s trade with Brazil for two years. China’s exports key year 1 China’s imports year 2 0 1 2 3 4 5 $ billion What happened to China’s trade balance with Brazil between year 1 and year 2? A It experienced a falling surplus. B It experienced a rising deficit. C It moved from deficit to surplus. D It moved from surplus to deficit.

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2021

Q116 · What is a reason for trade protection? 0455/13 Oct/Nov 2021

29 What is a reason for trade protection? A to reduce a deficit on the current account of the balance of payments B to reduce a surplus on the current account of the balance of payments C to reduce economic growth D to reduce inflation

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2021

Q117 · What is an immediate effect for a country of a fall in its foreign exchange rate? 0455/13 Oct/Nov 2021

30 What is an immediate effect for a country of a fall in its foreign exchange rate? A a fall in the money supply B an increase in purchasing power C cheaper imports D more competitive exports

1 marks

Answer: D

This question in 0455/13 Oct/Nov 2021

Q118 · What is most likely to result from a reduction in the value of a country’s currency if… 0455/12 May/June 2022

29 What is most likely to result from a reduction in the value of a country’s currency if there are no other changes in the economy? A A trade in goods surplus will fall. B Export prices will rise. C Import prices will rise. D The inflation rate will fall.

1 marks

Answer: C

This question in 0455/12 May/June 2022

Q119 · A country has a surplus on the current account of its balance of payments 0455/13 May/June 2022

29 A country has a surplus on the current account of its balance of payments. What would be most likely to cause the country to move into deficit? A devaluation of its fixed exchange rate B government subsidies to its exporters C improved technology in other countries D productivity increases in its export industries

1 marks

Answer: C

This question in 0455/13 May/June 2022

Q120 · The table shows some details from a country’s balance of payments that has no secondary… 0455/11 Oct/Nov 2022

27 The table shows some details from a country’s balance of payments that has no secondary income (current transfers). item $ million exports of goods 280 imports of goods 350 exports of services 110 imports of services 60 net primary income – 40 What is the country’s balance on its current account? A a deficit of $60 million B a deficit of $160 million C a surplus of $20 million D a surplus of $760 million

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2022

Q121 · Vietnamese companies buy insurance from companies in the US 0455/11 Oct/Nov 2022

28 Vietnamese companies buy insurance from companies in the US. How will this transaction be recorded in the Vietnamese balance of payments? section credit / debit A trade in goods credit B trade in services credit C trade in services debit D current transfers debit

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2022

Q122 · The table shows some details from a country’s balance of payments 0455/12 Oct/Nov 2022

27 The table shows some details from a country’s balance of payments. The country has no secondary income (current transfers). item $ million exports of goods 280 imports of goods 350 exports of services 110 imports of services 60 net primary income – 40 What is the country’s balance on its current account? A a deficit of $60 million B a deficit of $160 million C a surplus of $20 million D a surplus of $760 million

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2022

Q123 · Vietnamese companies buy insurance from companies in the US 0455/12 Oct/Nov 2022

28 Vietnamese companies buy insurance from companies in the US. How will this transaction be recorded in the Vietnamese balance of payments? section credit / debit A trade in goods credit B trade in services credit C trade in services debit D current transfers debit

1 marks

Answer: C

This question in 0455/12 Oct/Nov 2022

Q124 · The table shows some details from a country’s balance of payments 0455/13 Oct/Nov 2022

27 The table shows some details from a country’s balance of payments. The country has no secondary income (current transfers). item $ million exports of goods 280 imports of goods 350 exports of services 110 imports of services 60 net primary income – 40 What is the country’s balance on its current account? A a deficit of $60 million B a deficit of $160 million C a surplus of $20 million D a surplus of $760 million

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2022

Q125 · Vietnamese companies buy insurance from companies in the US 0455/13 Oct/Nov 2022

28 Vietnamese companies buy insurance from companies in the US. How will this transaction be recorded in the Vietnamese balance of payments? section credit / debit A trade in goods credit B trade in services credit C trade in services debit D current transfers debit

1 marks

Answer: C

This question in 0455/13 Oct/Nov 2022

Q126 · What is an advantage of a floating exchange rate for an economy? 0455/12 Feb/March 2023

29 What is an advantage of a floating exchange rate for an economy? A It can correct a current account deficit or surplus. B It creates certainty for firms importing goods. C It increases government control of the economy. D It stops money flows into and out of the economy.

1 marks

Answer: A

This question in 0455/12 Feb/March 2023

Q127 · The table shows information from a country’s current account of its balance of payments 0455/12 Feb/March 2023

30 The table shows information from a country’s current account of its balance of payments. $ billion exports of goods 20 imports of goods 24 net services +5 net primary income –8 net secondary income –8 What is the country’s current account balance? A +$1 billion B –$4 billion C –$7 billion D –$15 billion

1 marks

Answer: D

This question in 0455/12 Feb/March 2023

Q128 · Which policy measure is most likely to reduce the current account deficit of the balance… 0455/11 May/June 2023

30 Which policy measure is most likely to reduce the current account deficit of the balance of payments of an economy? A decrease the level of subsidies to domestic producers B increase infrastructure spending to increase domestic productivity C increase interest rates D remove import tariffs

1 marks

Answer: B

This question in 0455/11 May/June 2023

Q129 · The table shows a country’s exports and imports 0455/12 May/June 2023

27 The table shows a country’s exports and imports. $m exports of goods 200 imports of goods 190 exports of services 35 imports of services 38 What was the country’s balance of trade in goods and services? A a deficit of $7million B a deficit of $13million C a surplus of $7million D a surplus of $13million

1 marks

Answer: C

This question in 0455/12 May/June 2023

Q130 · Country X has a persistent deficit on the current account of the balance payments 0455/12 May/June 2023

30 Country X has a persistent deficit on the current account of the balance payments. Which policy measure is most likely to improve this situation? A lowering import quotas B lowering income tax C lowering import tariffs D lowering export subsidies

1 marks

Answer: A

This question in 0455/12 May/June 2023

Q131 · What is the correct formula for calculating the current account of the balance of… 0455/13 May/June 2023

30 What is the correct formula for calculating the current account of the balance of payments? A balance of trade in goods + balance of trade in services + primary income balance + secondary income balance B government revenue from abroad – domestic government spending C D total exports of services + total imports of goods

1 marks

Answer: A

This question in 0455/13 May/June 2023

Q132 · Many European firms employ workers from the Philippines 0455/12 Oct/Nov 2023

30 Many European firms employ workers from the Philippines. These workers send part of their income to relatives in the Philippines. In which part of the balance of payments current account for the Philippines would these transactions be recorded? A primary income B secondary income C trade in goods D trade in services

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2023

Q133 · What is measured in the secondary income balance in a country’s current account of the… 0455/13 Oct/Nov 2023

30 What is measured in the secondary income balance in a country’s current account of the balance of payments? A net contributions to international and regional organisations B net exports of goods and services C net foreign investment flows D net inflow of income from factors of production abroad

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2023

Q134 · What is included in the primary income component on the current account of the balance of… 0455/12 Feb/March 2024

30 What is included in the primary income component on the current account of the balance of payments? A dividends and interest from investment in other countries B expenditure on accommodation by international tourists visiting a country C expenditure on imported raw materials D social security payments paid to residents living abroad

1 marks

Answer: A

This question in 0455/12 Feb/March 2024

Q135 · The table shows the average exchange rate of the UK pound (£) to the US dollar ($), that… 0455/12 May/June 2024

29 The table shows the average exchange rate of the UK pound (£) to the US dollar ($), that is the amount of $ that can be bought with £1. exchange rate year UK£ / US$ 1 1.64 2 1.52 3 1.35 4 1.25 What is a likely effect of this change on the UK economy? A decreased cost-push inflation B decreased current account deficit C increased quantity of imports D increased trade deficit

1 marks

Answer: B

This question in 0455/12 May/June 2024

Q136 · The table shows components of Japan’s current account balance in trillion yen (¥) for 2… 0455/12 May/June 2024

30 The table shows components of Japan’s current account balance in trillion yen (¥) for 2 years. balance of balance of balance of balance of goods year services primary income secondary income ¥ trillion ¥ trillion ¥ trillion ¥ trillion 1 –1.61 –1.76 14.04 –1.11 2 –5.23 –2.33 13.55 –1.02 Which balance improved between year 1 and year 2? A balance of goods B balance of primary income C balance of secondary income D balance of services

1 marks

Answer: C

This question in 0455/12 May/June 2024

Q137 · The diagram shows China’s trade with Brazil for two years 0455/13 May/June 2024

30 The diagram shows China’s trade with Brazil for two years. China’s exports key year 1 China’s imports year 2 0 1 2 3 4 5 $ billion What happened to China’s trade balance with Brazil between year 1 and year 2? A It experienced a falling surplus. B It experienced a rising deficit. C It moved from deficit to surplus. D It moved from surplus to deficit.

1 marks

Answer: D

This question in 0455/13 May/June 2024

Q138 · What is the most likely cause of an increased current account surplus in a country? 0455/11 Oct/Nov 2024

30 What is the most likely cause of an increased current account surplus in a country? A lower prices for the country’s exports B higher exchange rate for the country C economic growth in the country D recession in trade-partner countries

1 marks

Answer: A

This question in 0455/11 Oct/Nov 2024

Q139 · The diagram shows the value of a country’s exports and imports of goods over five years 0455/12 Oct/Nov 2024

30 The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goods 10 5 0 1 2 3 4 5 year 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? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5

1 marks

Answer: C

This question in 0455/12 Oct/Nov 2024

Q140 · Country X records these selected items in the current account of its balance of payments 0455/13 Oct/Nov 2024

30 Country X records these selected items in the current account of its balance of payments. • Country X exports $200m of goods. • Country X imports $50m of services. • Country Y’s citizens working in country X send home to relatives $25m. • Country X sends country Y $75m of aid. By how much did the balance on the current account of country X increase? A $50m B $100m C $200m D $350m

1 marks

Answer: A

This question in 0455/13 Oct/Nov 2024

Q141 · A government wishes to reduce the surplus on the current account of its balance of… 0455/12 Feb/March 2025

30 A government wishes to reduce the surplus on the current account of its balance of payments. Which policy is likely to achieve this? A cutting government spending B devaluing its currency C increasing existing import quotas D increasing import duties

1 marks

Answer: C

This question in 0455/12 Feb/March 2025

Q142 · The table shows the values of the items in a country’s current account in two years 0455/11 May/June 2025

30 The table shows the values of the items in a country’s current account in two years. year 1 year 2 item ($m) ($m) balance of goods and −30 0 services net primary income −30 −20 net secondary income ? ? balance of current −50 +10 account How did the value of net secondary income change between year 1 and year 2? A decreased by $10m B decreased by $20m C increased by $20m D increased by $30m

1 marks

Answer: C

This question in 0455/11 May/June 2025

Q143 · What is a consequence of a surplus on the current account of the balance of payments? 0455/12 May/June 2025

30 What is a consequence of a surplus on the current account of the balance of payments? A a decrease in GDP B a decrease in unemployment C a depreciation of the foreign exchange rate D deflation

1 marks

Answer: B

This question in 0455/12 May/June 2025

Q144 · The table shows a selection of economic data for a country 0455/13 May/June 2025

30 The table shows a selection of economic data for a country. $m primary income 1000 secondary income –500 total value of exported goods 1000 total value of imported goods 2000 total value of exported services 800 total value of imported services 200 What is the current account balance of the balance of payments of this country? A $100m B $600m C $4500m D $4725m

1 marks

Answer: A

This question in 0455/13 May/June 2025

Q145 · What is most likely to directly result from a persistent and large current account… 0455/11 Oct/Nov 2025

30 What is most likely to directly result from a persistent and large current account surplus on the balance of payments of a country? A a lower exchange rate B a lower standard of living C an increase in gross domestic product D an increase in the unemployment rate

1 marks

Answer: C

This question in 0455/11 Oct/Nov 2025

Q146 · Which combination of changes in export revenue and import expenditure is most likely to… 0455/12 Oct/Nov 2025

29 Which combination of changes in export revenue and import expenditure is most likely to cause a country’s exchange rate to depreciate? export revenue import expenditure A decreases decreases B decreases increases C increases decreases D increases increases

1 marks

Answer: B

This question in 0455/12 Oct/Nov 2025

Q147 · A government wishes to reduce the deficit on the current account of its balance of… 0455/12 Oct/Nov 2025

30 A government wishes to reduce the deficit on the current account of its balance of payments. Which policy should it adopt? A increase subsidies on exports B increase taxes on its exports C remove an embargo on imports D remove tariffs on its imports

1 marks

Answer: A

This question in 0455/12 Oct/Nov 2025

Q148 · What is a likely government policy to reduce a deficit on the current account of the… 0455/13 Oct/Nov 2025

30 What is a likely government policy to reduce a deficit on the current account of the balance of payments? A increasing the value of the foreign exchange rate B increasing training for workers in export industries C reducing subsidies to domestic export industries D reducing tariffs on imported goods and services

1 marks

Answer: B

This question in 0455/13 Oct/Nov 2025