Economics 0455 · IGCSE · Current account of balance of payments
Current account of balance of payments — practice question
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.
(a)[2]
Define what is meant by foreign exchange rate.
(b)[4]
Explain two reasons why a country’s exports may be worth more than its imports.
(c)[6]
Analyse how an increase in income tax may influence a country’s inflation rate.
(d)[8]
Discuss whether governments ought to target a high rate of economic growth.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A currency’s price or value” …