Current account of balance of payments

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 largest surplus in 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 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 income flows or transfers?

May/June 2015

Sweden is a very advanced European nation with one of the world’s highest living standards. In 2012, its people had an average income of US$49000. The country’s labour force of five million is highly skilled. Around 70% of schoolchildren continue on to university. Over time, investment has been high in Sweden, so each worker has a large amount of capital goods to use. In 2012, however, the rate of economic growth slowed. The Swedish Government hoped that increasing the retirement age to 67 would lift the country’s economic growth rate. Sweden sells half of its output abroad. Its exports include a variety of products such as cars and capital goods. Its imports include petrol, cars and iron. Table 1 shows the current account balance of its balance of payments across the period 2008-2013. A country’s trade position is affected by its inflation rate. In fact, a lower inflation rate can make a country’s products more internationally competitive. The Swedish Government wants the annual inflation rate to be 2% or less. 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 spending, investment and the exchange rate. In recent years, Sweden’s inflation rate has stayed low, averaging 1.9% between 2008 and 2013. Low inflation gives Swedish firms certainty. The best known Swedish firm is probably IKEA, which makes furniture and household accessories. In 2012, it cut its prices which, as on earlier occasions, led to an increase in revenue. In 2013, its owners said that their chief aim was to enlarge the firm by opening new stores all over the world, including in its growing markets in China and Russia.

May/June 2015

Chile supplies one third of the world’s copper. Any shift in either demand for copper or the supply of copper influences Chile’s Gross Domestic Product (GDP) and the current account balance within its balance of payments.

May/June 2015

What factors could make Mauritius’s current account balance improve?

May/June 2016

70% of the 10 million kilograms of tea produced in India is exported. The largest purchasers are the UK, Japan, and Germany. Wholesale prices rose $10\%$ in 2013 because a strike restricted supply. How would these circumstances be recorded in international trade accounts?

May/June 2016

What could make the balance on Mauritius’s current account improve?

May/June 2016

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

May/June 2017

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

May/June 2017

During 2012, the UK hosted the Olympic Games, and this drew a very 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, which drew a large number of visitors from other countries. Which part of the UK’s current account balance would have gained a direct benefit from this event?

May/June 2018

US farms are becoming larger. In Indiana, one dairy farm has more than 38 000 cows. Farms in the USA face competition from farms in both developed and developing countries. The value of the milk exports from these farms is recorded in the trade in goods part of the current account in the USA’s balance of payments.

May/June 2018

A country is running a deficit on the current account of its balance of payments. What could cause the deficit to rise?

May/June 2021

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

May/June 2021

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

May/June 2021

The Canadian government has put in place several policy measures aimed at encouraging more women to join the labour force. Canada’s labour force has shrunk because its population has become older. The number of workers and the amount they produce are affected by changes 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

Which policy measure is most likely to decrease the current account deficit in an economy’s balance of payments?

May/June 2023

The table gives 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 experiencing a continuing current account deficit in the balance of payments. Which policy measure is most likely to reduce this problem?

May/June 2023

Germany has a higher death rate than several other countries, such as Sweden, Cuba and the Maldives. Between 2011 and 2021, Germany’s labour force grew in size and became more productive. The country has also recorded low inflation and a rising surplus on the current account of its balance of payments.

May/June 2023

In 2019, China’s economic growth rate stood at 6.1%, and Chinese households spent more. A greater number of Chinese people went to sports events, and the income of leading sportspeople rose. China exported more, even though tariffs on some of its products increased. For instance, the US raised tariffs on Chinese tea and coffee imports.

May/June 2023

Brazil recorded a balance of payments current account deficit of $\text{US}\$23.5$ billion. Which policy is most likely to cut the current account deficit in Brazil?

May/June 2024

The table presents components of Japan’s current account balance in trillion yen (¥) over 2 years. Which balance became better from year 1 to year 2?

May/June 2024

The table presents the amounts for a country’s current account in two years. By how much did net secondary income change from year 1 to year 2?

May/June 2025

What result can a surplus on the current account of the balance of payments lead to?

May/June 2025

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 between 1999 and 2003?

Oct/Nov 2015

The diagram presents China’s trade with Brazil in 1999 and 2003, shown in billions of dollars. Using the diagram, what change occurred in China’s trade balance with Brazil between 1999 and 2003?

Oct/Nov 2015

Capital goods account for more than half of Japanese exports. In 2013, Japan’s imports increased more quickly than its exports, yet the current account of its balance of payments still recorded a surplus. Around the world, stronger trade was prompting the opening of new airports to satisfy demand for moving goods.

Oct/Nov 2015

The table presents the components of Japan’s current account balance in trillion Yen for 2011 and 2012. Which balance improved from 2011 to 2012?

Oct/Nov 2016

A large share of Mauritania’s territory is desert, and repeated droughts create pressure on the nation’s food supply. Even so, the African country has one major advantage: coastal waters that are among the most abundant fishing grounds in the world. Roughly $95\%$ of the fish landed by Mauritania’s small-scale fishing boats is sent abroad. The money earned from selling fish overseas adds to the current account in the country’s balance of payments. In 2013, Mauritania recorded a surplus on trade in goods and also a surplus on current transfers. Very little of the catch is processed in Mauritania into products with higher value, apart from a few factories in Nouakchott, the capital city. This lack of processing is affecting both the income earned from the fish caught and the country’s economic growth. Total output did rise from US$8 billion in 2012 to US$8.5 billion in 2013. That same year also brought a shift in population figures. The birth rate stood at $31.83$, the death rate at $8.35$, and the migration rate at $-0.85$ per thousand of the population. Some Mauritanian economists criticise the government for allowing other countries, such as Algeria, Morocco, Japan and Russia, to take large amounts of fish from Mauritania’s waters. They have recently objected to the government’s agreement with the European Union (EU), which permits more than one hundred large EU vessels to fish in Mauritania’s waters in exchange for US$105 million each year. These EU vessels, with their highly trained workers, are catching very large quantities of fish, including highly valuable squid, and are believed to be endangering the long-term sustainability of Mauritania’s fishing industry. Mauritanian economists expect fish stocks to fall sharply over the next twenty years. At present, the country’s economy depends very heavily on the primary sector. If both the fishing industry and agriculture became more productive, that would help to lower unemployment and reduce poverty in the country.

Oct/Nov 2016

In 2011, it was reported that the United States (US) needed to reduce its current account deficit. Which policy would assist with this in the short run?

Oct/Nov 2017

A developing economy records a $75 billion surplus on trade in goods and a $25 billion deficit on trade in services, and its current account is balanced overall. Which values of net income (primary income) and net transfers (secondary income) are needed for the current account to remain in balance?

Oct/Nov 2017

An estimate suggests that, in 2016, the Olympic Games held in Rio, Brazil drew more than 600 000 overseas visitors. What was likely to be the effect of this number of visitors?

Oct/Nov 2018

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. Which term describes Australia’s balance of trade over this period?

Oct/Nov 2018

What factor would lead to a favourable change in the Kenyan trade in services (invisible) account?

Oct/Nov 2019

What might lead to an increase in the deficit on the current account of the balance of payments?

Oct/Nov 2019

What would lead to an improvement in the Kenyan trade in services (invisible) account?

Oct/Nov 2019

If a country wants to raise its current account surplus on the balance of payments, what action should it choose?

Oct/Nov 2020

The table gives figures for a country's exports and imports. What was the country's balance of trade in goods and services?

Oct/Nov 2020

The diagram illustrates a country's exports and imports of goods by value over five years. During which pair of 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

What would not be recorded in the current account of the balance of payments?

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

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?

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

Read the source material closely before answering Question 1. Source material: India’s airline industry Air India is government-owned in India. As fresh firms have entered India’s air transport market, Air India’s power to choose prices has weakened. The state-owned airline competes not just with rival airlines but also with other transport modes such as trains and ships. In 2017, the Indian government made an unsuccessful attempt to sell Air India to the private sector. If that sale had succeeded, the Indian government would have gained revenue and the airline might have become more efficient. Forecasts suggest that by 2025 India will have the third largest airline industry. Growth in the industry may influence India’s current account position in its balance of payments. Table 1.1 shows the current account position in India and four other countries. More routes and a better passenger experience may lead to more tourists travelling to India. A larger Indian airline industry is likely to make it easier for people and goods to move into and out of India. This could draw in more multinational companies (MNCs) and lower firms’ production costs. India’s air transport market has several difficulties. India has the highest airline fuel tax in Asia. Some economists argue that this should be raised further to boost tax revenue and cut market failure. Other airline costs are rising, yet it is difficult for airlines to increase fares because Indian air passengers are among the world’s most price-sensitive. Some airlines prevent costs from rising further by improving staff training, adopting new technology and improving pilots’ working conditions. The ability of airlines to recruit pilots depends, among other things, on the quality of education and the availability of other jobs.

Oct/Nov 2021

South Africa has a large pool of unemployed workers. In recent years, South Africa’s inflation rate has been steady, partly because wages have been relatively stable. When wages rise, this can lead to inflation and can increase the quantity of consumer goods that are bought and produced. To raise employment and reduce the deficit on the current account of South Africa’s 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. The country has no secondary income (current transfers). What is the country’s balance on its current account?

Oct/Nov 2022

Companies in Vietnam purchase insurance from companies based in the US. In which section of the Vietnamese balance of payments would this transaction be entered?

Oct/Nov 2022

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

Oct/Nov 2022

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

Oct/Nov 2022

Palau is a small island state in the Pacific Ocean. It has benefited from substantial financial aid from 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 of its balance of payments. During 2019, commercial bank lending to firms and households in Palau rose.

Oct/Nov 2022

A number of European companies hire workers from the Philippines. Those workers remit 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

The diagram illustrates a country’s export and import values for goods across five years. During which two years did the country experience a rise in import value and an improvement in its balance of trade in goods?

Oct/Nov 2024

Country X shows the following selected items in its balance of payments current account. • Country X sells $200\,$m worth of goods to other countries. • Country X buys $50\,$m worth of services from overseas. • Citizens of country Y who are employed in country X remit $25\,$m back to relatives. • Country X gives country Y $75\,$m in aid. By what amount did country X’s current account balance rise?

Oct/Nov 2024

In 2020, Jordan recorded a deficit on the current account of its balance of payments. That deficit helped to reduce Jordan’s total demand in that year. The lower total demand was the chief reason that the number of workers was higher than the number of jobs available. Employment decreased in most of Jordan’s industries. A key industry in Jordan is tourism. In recent years, some Jordanian tourism firms have merged. These mergers lowered the prices of some holidays and improved their quality. Jordan’s population is still rising. This is mainly because net immigration is positive, although the birth rate is also above the death rate. Table 1.1 shows the birth rate and average age in six countries in 2020. Changes in the size of a country’s population affect the market for many products, including clothing. A larger population also increases pressure on the country’s energy supplies. The Jordanian government has several major renewable energy projects and intends to spend even more on such projects. Greater use of renewable energy, including wind and solar power, can cut environmental harm and may be relatively inexpensive in the long term. However, most renewable energy generators, including hydroelectric power stations, are expensive to construct. In addition, wind turbines and solar panels depend on favourable weather conditions. Some government spending in Jordan is paid for by borrowing. At the beginning of 2021, the Jordanian central bank was expected to increase the interest rate. This was because total demand was forecast to rise and positive economic growth was expected to return. A higher interest rate could affect Jordan’s foreign exchange rate and investment.

Oct/Nov 2024

A government wants to decrease the deficit on the current account of its balance of payments. Which policy ought it to adopt?

Oct/Nov 2025

Which government policy is likely to reduce a deficit on the current account of the balance of payments?

Oct/Nov 2025

Chad, a Central African nation, has a population pyramid that is triangle-shaped and experiences a high level of poverty. It usually records an overall current account deficit in its balance of payments. Chad normally shows a surplus on secondary income. By contrast, trade in goods, trade in services and primary income are each usually in deficit. Some economists argue that the Chadian Government ought to introduce import quotas to cut its trade in goods deficit.

Oct/Nov 2025