Economics 0455 · IGCSE · Current account of balance of payments
Current account of balance of payments — practice question
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.
(a)[2]
Identify two examples of capital goods that a farm may use.
(b)[4]
Explain how a country may record a trade in goods surplus yet still have a deficit on the current account of the balance of payments.
(c)[6]
Analyse the economies of scale a farm may benefit from.
(d)[8]
Discuss whether developing countries gain from producing mainly primary products.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Farm tractor” …