Current account of balance of payments

Foreign tourism has grown. Increasing numbers of people from both developed and developing countries are going on holidays overseas. Foreign tourism brings advantages as well as disadvantages. It creates employment, although some of the jobs are poorly paid and require few skills. The quality of employment can vary between developed and developing countries, as can the problems they face, including population problems.

Feb/March 2016

The table gives information about India’s current account in the balance of payments for the 1st quarter of 2014. What is the trade in services (invisible) balance?

Feb/March 2017

Abu Dhabi has a rapidly developing economy. Three new museums are being built in its new cultural district, and these may draw in more tourists and improve its balance of payments. Some of the art works in the museums will be extremely expensive.

Feb/March 2017

What factors would result in an improvement in the Indian trade in services (invisible) account?

Feb/March 2018

A country brings in oil from abroad, and this oil is then used to produce and distribute goods. The country has also seen higher incomes, causing a substantial rise in the demand for goods, some of which are imported. What is likely to occur to the country’s balance of trade in goods (visible) and to the price of oil?

Feb/March 2018

What action could a government take to cut a current account deficit?

Feb/March 2019

Here is a country’s balance of payments, and it has no secondary income (current transfers). Items (in $\$\text{ million}$): exports of goods $= 280$, imports of goods $= 350$, exports of services $= 110$, imports of services $= 60$, net primary income $= -40$. What is the balance on the country’s current account?

Feb/March 2019

Ireland has drawn a substantial number of foreign multinational companies (MNCs) to establish production there. These firms provide jobs for about 10% of the country’s labour force and account for a large share of Ireland’s exports. In 2016, Ireland’s current account surplus in the balance of payments decreased, while government expenditure increased.

Feb/March 2019

The table lists a set of economic data for a country. Primary income (net income transfers): $1000\,\text{m}$ Secondary income (net current transfers): $-500\,\text{m}$ Total value of exported goods: $1000\,\text{m}$ Total value of imported goods: $2000\,\text{m}$ Total value of exported services: $800\,\text{m}$ Total value of imported services: $200\,\text{m}$ Calculate the current account balance for this country.

Feb/March 2020

A country is recording a current account deficit in its balance of payments. Which measure is most likely to decrease the deficit?

Feb/March 2021

A country recorded a deficit in each of its trade in goods, primary income and secondary income. Even so, it showed a surplus on the current account of its balance of payments. What does this imply?

Feb/March 2021

The table gives details from a country’s current account in its balance of payments. What is the balance on the country’s current account?

Feb/March 2023

What items are recorded in the primary income section of the current account of the balance of payments?

Feb/March 2024

A government wants to cut the surplus on the current account of its balance of payments. Which policy is most likely to bring this about?

Feb/March 2025

The table presents the trade in goods balance and the current account balance of the balance of payments for four countries over one year. Which country recorded the greatest surplus on its trade in services, assuming there were no other transfers or income flows?

May/June 2015

The table presents data about the trading position of four major economies in 2013. Which country had the most favourable trading position?

May/June 2015

The table sets out the trade in goods balance and the current account balance of the balance of payments for four countries during one year. Which country had the largest surplus on its trade in services, assuming that there were no other income or transfer flows?

May/June 2015

The table presents the trade in goods balance and the current account balance of the balance of payments for four countries over one year. Which country recorded the biggest surplus on its trade in services, assuming there were no other transfers or income flows?

May/June 2015

Sweden is a very advanced European nation that enjoys one of the world’s highest standards of living. In 2012, its citizens had an average income of US$49000. The country has a labour force of five million and this workforce is highly skilled. Around 70% of schoolchildren continue on to university. Over time, Sweden has attracted substantial investment and, as a result, each worker has a high value of capital goods to use. In 2012, though, its economic growth rate weakened. The Swedish Government hoped that increasing the retirement age to 67 would raise the country’s economic growth rate. Sweden sells half of its output abroad. Its exports include a range of products such as cars and capital goods. Its imports include petrol, cars and iron. Table 1 shows the balance on the current account of its balance of payments for the period 2008-2013. A country’s trade position is affected by its inflation rate. In fact, if a country’s inflation rate falls, the international competitiveness of its products may improve. The Swedish Government wants the annual inflation rate to stay at 2% or below. If there is a danger that inflation will go above the 2% target, the Swedish Central Bank will increase the interest rate. This change is likely to affect consumer expenditure, investment and the exchange rate. In recent years, Sweden’s inflation rate has stayed low, averaging 1.9% between 2008 and 2013. This low inflation rate gives Swedish firms certainty. Sweden’s best-known firm is probably IKEA, which makes furniture and household accessories. In 2012, it cut its prices which, as had happened before, led to a rise in its revenue. In 2013, its owners said that their chief aim was to make the firm larger by opening new stores all over the world, including in its growing markets in China and Russia.

May/June 2015

What could lead to an improvement in Mauritius’s current account balance?

May/June 2016

In India, 70% of the 10 million kilograms of tea produced is exported. The largest buyers are the UK, Japan, and Germany. In 2013, wholesale prices increased by $10\%$ because a strike limited supply. How would these events appear in international trade accounts?

May/June 2016

What could lead to an improvement in Mauritius’s current account balance?

May/June 2016

What could lead to an improvement in the balance on Mauritius’s current account?

May/June 2016

Over the past few years, the US has recorded a deficit on the overall current account of its balance of payments. What might have caused the deficit to become larger?

May/June 2017

In 2010, Vietnam recorded a deficit in the value of its trade in goods (visible) even though it exported a larger quantity of goods than it imported. What might account for this?

May/June 2017

The UK hosted the Olympic Games in 2012, and this drew a large number of visitors from overseas. Which item in the UK’s current account balance would have gained directly from this event?

May/June 2018

In 2012, the UK hosted the Olympic Games, and this drew a large number of visitors from overseas. Which part of the UK's current account balance would have gained directly from this event?

May/June 2018

In $2012$ the UK hosted the Olympic Games, drawing a large number of visitors from overseas. Which item in the UK’s current account balance would have gained directly from this event?

May/June 2018

This table is about a country’s balance of payments on current account. The figures shown are: - goods exports: $100\,\text{bn}$ - goods imports: $125\,\text{bn}$ - services exports: $60\,\text{bn}$ - services imports: $50\,\text{bn}$ - income and transfers balance: $+10\,\text{bn}$ What conclusion can be drawn from the table?

May/June 2018

US farms are growing larger. One dairy farm in Indiana has over 38 000 cows. US farms compete with farms in both developed and developing countries. The value of the farms’ milk exports is shown in the trade in goods part of the USA’s balance of payments current account.

May/June 2018

Which item will be recorded as an outflow in the services section of the current account of the US balance of payments?

May/June 2019

Germany has one of the strongest-performing economies in the European Union (EU). Unemployment is low, and the current account of the balance of payments is in surplus. However, single parents, the long-term unemployed, immigrants, the elderly and low-skilled workers have not always shared in Germany’s economic success. This has led to rising levels of relative poverty.

May/June 2019

A country is running a deficit on the current account of its balance of payments. What might make that deficit larger?

May/June 2021

What might be caused by a balance of payments trade surplus?

May/June 2021

A country is in current account deficit on its balance of payments. What might cause that deficit to become larger?

May/June 2021

A country is running a deficit on the current account of its balance of payments. What might make this deficit larger?

May/June 2021

The Canadian government has put in place several policy measures to encourage more women to join the labour force. Canada’s labour force has shrunk as the population has aged. The numbers of workers and their output are affected by movements in the country’s foreign exchange rate and by consumer expenditure. In 2018, the Canadian dollar lost value while Canadian consumer expenditure rose.

May/June 2021

A country records a surplus on the current account of its balance of payments. What change would be most likely to push the country into a deficit?

May/June 2022

Australia’s foreign exchange rate varies over time. The worth of Australia’s exports is often higher than the worth of its imports. Australia is Papua New Guinea’s chief trading partner. In 2019, the government of Papua New Guinea raised income tax to lower its inflation rate. It also used other policy measures to lift its economic growth rate.

May/June 2022

Which policy measure would be most likely to cut the current account deficit in an economy’s balance of payments?

May/June 2023

The table lists a country's exports and imports. Exports of goods: $200$ $\text{m}$ Imports of goods: $190$ $\text{m}$ Exports of services: $35$ $\text{m}$ Imports of services: $38$ $\text{m}$ What was the country's balance of trade in goods and services?

May/June 2023

Country X is facing a continuing deficit on the current account of the balance payments. Which policy measure would be most likely to reduce this problem?

May/June 2023

What is the correct formula used to calculate the current account of the balance of payments?

May/June 2023

Brazil recorded a current account deficit on its balance of payments of US$23.5 billion. Which policy is most likely to cut Brazil’s current account deficit?

May/June 2024

The table presents components of Japan’s current account balance in trillion yen (¥) for 2 years. Which balance increased between year 1 and year 2?

May/June 2024

The diagram illustrates China’s trade with Brazil over two years. What change occurred in China’s trade balance with Brazil from year 1 to year 2?

May/June 2024

The table gives the values of a country's current account items in two years. How did the value of net secondary income change from year 1 to year 2?

May/June 2025

What is an effect of a surplus on the current account of the balance of payments?

May/June 2025

The table gives a set of economic figures for a country. Primary income: $1000$m Secondary income: $-500$m Total value of exported goods: $1000$m Total value of imported goods: $2000$m Total value of exported services: $800$m Total value of imported services: $200$m What is the current account balance in the balance of payments of this country?

May/June 2025

In what ways might different oil-consuming countries view a sharp increase in the price of oil?

Oct/Nov 2015

The diagram illustrates China’s trade with Brazil in 1999 and 2003, measured in billions of dollars. Using the diagram, what change occurred in China’s trade balance with Brazil from 1999 to 2003?

Oct/Nov 2015

The diagram illustrates China’s trade with Brazil in 1999 and 2003, measured in billions of dollars. Using the diagram, what change took place in China’s trade balance with Brazil from 1999 to 2003?

Oct/Nov 2015

The diagram presents China’s trade with Brazil in 1999 and 2003, measured in billions of dollars. Using the diagram, what change took place in China’s trade balance with Brazil from 1999 to 2003?

Oct/Nov 2015

Capital goods account for more than half of Japanese exports. In 2013, even though Japan’s imports climbed faster than its exports, the current account of its balance of payments still showed a surplus. Globally, rising trade was prompting the opening of new airports to meet the need to transport goods.

Oct/Nov 2015

The table presents the components of Japan’s current account balance, measured in trillion Yen, for 2011 and 2012. Which balance became better between 2011 and 2012?

Oct/Nov 2016

An economy is running a deficit on its balance of trade in manufactured goods. Which government policy would reduce this deficit?

Oct/Nov 2017

What is a country said to have when the value of its exported goods is greater than the value of its imported goods?

Oct/Nov 2017

In 2011, it was said that the United States (US) needed to cut its current account deficit. What would assist this in the short run?

Oct/Nov 2017

A developing economy records a surplus on its trade in goods of $\text{\$}75$ billion and a deficit on its trade in services of $\text{\$}25$ billion, with its current account balanced overall. Which amounts of net income (primary income) and net transfers (secondary income) would make the current account balance?

Oct/Nov 2017

In 2015, Venezuela was facing several difficulties. Even with government subsidies, rising demand meant that food shortages occurred. The drop in the global price of oil widened the deficit on the current account of the country’s balance of payments. Oil made up almost 90% of the country’s export earnings. In Venezuela, oil is produced by one large state-owned company, but the country also has many sole traders involved in other industries.

Oct/Nov 2017

Trade protection limits the opportunity for countries to specialise and affects the current account positions that countries record in their balance of payments. The extent and forms of trade protection used by developed and developing countries are different. Developed countries also generally have a lower death rate than developing countries.

Oct/Nov 2017

Which government policy is most likely to improve a country's balance of trade?

Oct/Nov 2018

It is estimated that the 2016 Olympic Games in Rio, Brazil drew more than $600\,000$ overseas visitors. What outcome was this number of visitors likely to produce?

Oct/Nov 2018

What is most likely to happen if South Korea sets up a factory in Switzerland that makes a profit?

Oct/Nov 2018

In July 2015, Australia’s balance of trade with the rest of the world was $-2809$ billion Australian dollars. By January 2016, it had changed to $-3294$ billion Australian dollars. What term describes Australia’s balance of trade over this period?

Oct/Nov 2018

What would lead to an improvement in Kenya’s trade in services (invisible) account?

Oct/Nov 2019

What would bring about an improvement in the Kenyan trade in services (invisible) account?

Oct/Nov 2019

What might lead to a larger deficit on the current account of the balance of payments?

Oct/Nov 2019

Which factor would result in an improvement in the Kenyan trade in services (invisible) account?

Oct/Nov 2019

The Monetary Authority of Singapore (MAS), the state institution that oversees the country's monetary policy, has permitted the Singapore dollar to appreciate. Yet the elevated value of the Singapore dollar has meant that firms need fresh incentives, including tax cuts and subsidies.

Oct/Nov 2019

A government is dealing with an undesirable deficit on the current account of its balance of payments. Which measure would be most likely to cut the deficit?

Oct/Nov 2020

The table gives data from a country’s current account within its balance of payments. Exports of goods: $20$ ($\text{billion}$) Imports of goods: $24$ ($\text{billion}$) Net services: $+5$ ($\text{billion}$) Net primary income: $-8$ ($\text{billion}$) Net secondary income: $-8$ ($\text{billion}$) What is the country’s current account balance?

Oct/Nov 2020

The diagram illustrates the values of a country’s exports and imports of goods across five years. Between which two years did the country record a higher value of imports and a more favourable balance of trade in goods?

Oct/Nov 2020

A country wants to raise its current account surplus in the balance of payments. Which action would it choose?

Oct/Nov 2020

The table presents a country’s exports and imports. What was the country’s balance of trade in goods and services?

Oct/Nov 2020

The diagram illustrates the value of a country’s exports and imports of goods across five years. Between which two years did the country experience a rise in the value of imports and an improvement in its balance of trade in goods?

Oct/Nov 2020

Which item would not appear in the current account of the balance of payments?

Oct/Nov 2020

The diagram illustrates a country's export and import values for goods across five years. During which two years did the country see higher import value and a better balance of trade in goods?

Oct/Nov 2020

The 2018 election of a new president in South Africa improved both business confidence and consumer confidence. Even though total demand rose, inflation rates declined. One government policy introduced special areas called economic zones, in which firms pay lower taxes, or no taxes at all. These zones are intended to help domestic firms become more internationally competitive, which may cut the deficit on South Africa’s current account in the balance of payments.

Oct/Nov 2020

The diagram illustrates China’s trade with Brazil over two years. How did China’s trade balance with Brazil change from year 1 to year 2? (Values are given in $\$~\text{billion}$.)

Oct/Nov 2021

The diagram illustrates China’s trade with Brazil over two years. What happened to China’s trade balance with Brazil from year $1$ to year $2$?

Oct/Nov 2021

The diagram illustrates China’s trade with Brazil over two years. How did China’s trade balance with Brazil change from year 1 to year 2?

Oct/Nov 2021

South Africa has a large number of workers who are unemployed. In recent years, South Africa’s inflation rate has stayed steady, in part because wages have also been fairly stable. If wages rise, inflation may increase, and the quantity of consumer goods bought and produced can also rise. To raise employment and cut South Africa’s current account deficit in its balance of payments, some economists argue that more foreign multinational companies (MNCs) should be encouraged to produce in South Africa.

Oct/Nov 2021

The table presents some information from a country’s balance of payments where there is no secondary income (current transfers). What is the balance on the country’s current account?

Oct/Nov 2022

Vietnamese companies purchase insurance from companies in the US. In the Vietnamese balance of payments, how will this transaction be shown?

Oct/Nov 2022

The table presents some information from a country’s balance of payments. This country has no secondary income (current transfers). The items listed are: exports of goods ($280 million), imports of goods ($350 million), exports of services ($110 million), imports of services ($60 million), and net primary income ($-40 million). What is the country’s balance on its current account?

Oct/Nov 2022

Companies in Vietnam purchase insurance from firms based in the US. In the Vietnamese balance of payments, how should this transaction be shown?

Oct/Nov 2022

The table gives selected information from a country’s balance of payments. The country has no secondary income (current transfers). What is the balance on the country’s current account?

Oct/Nov 2022

Vietnamese firms purchase insurance from companies in the US. In the Vietnamese balance of payments, how would this transaction be entered?

Oct/Nov 2022

Palau is a small island nation in the Pacific Ocean. It has been given substantial financial assistance by the US. Living standards are believed to be lower in Palau than in the US. Palau applies some of the highest tariffs in the world. These trade tariffs influence Palau’s current account within its balance of payments. In 2019, commercial bank lending to firms and households in Palau rose.

Oct/Nov 2022

A number of European companies hire employees from the Philippines. These employees transfer some of their earnings to family members in the Philippines. In which section of the Philippines' balance of payments current account would these transactions be entered?

Oct/Nov 2023

What does the secondary income balance measure in a country’s current account of the balance of payments?

Oct/Nov 2023

What is the most likely reason for an increase in a country’s current account surplus?

Oct/Nov 2024

The diagram presents the value of a country’s exports and imports of goods across five years. Between which two years did the country experience a rise in the value of imports and an improvement in its balance of trade in goods?

Oct/Nov 2024

The current account of country X’s balance of payments includes these selected entries. • Country X exports $\$200\,\text{m}$ of goods. • Country X imports $\$50\,\text{m}$ of services. • Citizens of country Y who work in country X remit $\$25\,\text{m}$ to relatives at home. • Country X provides country Y with $\$75\,\text{m}$ in aid. By how much did country X’s current account balance rise?

Oct/Nov 2024

Study the source material closely before you answer Question 1. Source text: Developments in Jordan’s economy and population In 2020, Jordan recorded a deficit on the current account of its balance of payments. This deficit helped to reduce Jordan’s total demand in that year. This weaker total demand was the main reason that the number of workers exceeded the number of jobs available. Employment declined in most of Jordan’s industries. Tourism is one of Jordan’s key industries. In recent years, some Jordanian tourism firms have merged. These mergers pushed down the prices of some holidays and improved their quality. Jordan’s population keeps rising. The main cause is net immigration, although the birth rate is also higher than the death rate. Table 1.1 presents the birth rate and average age in six countries in 2020. Changes in a country’s population size influence the market for many products, including clothing. A rise in population also increases pressure on the country’s energy sources. The Jordanian government has several major renewable energy projects and intends to spend even more on these projects. Greater dependence on renewable energy, such as wind and solar power, can cut environmental harm and may be comparatively inexpensive in the long term. However, most renewable energy generators, including hydroelectric power stations, are costly to construct. In addition, wind turbines and solar panels depend on suitable weather conditions. Some of the Jordanian government’s spending is paid for by borrowing. At the start of 2021, the Jordanian central bank was expected to increase the rate of interest. This was because total demand was forecast to rise and positive economic growth was expected to return. A higher interest rate could influence Jordan’s foreign exchange rate and investment.

Oct/Nov 2024

Madagascar’s central bank steps in within the country’s foreign exchange market. Even so, Madagascar operates mainly as a market economic system. About 70% of Madagascar’s population live in poverty. Most of the nation’s industries are labour-intensive. In 2020, Madagascar recorded economic growth of 6% and a deficit on the current account of its balance of payments of $0.6bn.

Oct/Nov 2024

What is the most likely direct consequence of a country having a persistent and substantial surplus on its current account in the balance of payments?

Oct/Nov 2025

A government wants to cut the deficit on the current account of its balance of payments. Which policy should it choose?

Oct/Nov 2025

What government policy might be used to cut a deficit on the current account of the balance of payments?

Oct/Nov 2025