Economics 2281 · O Level · Current account of balance of payments
Current account of balance of payments — practice question
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.
(a)[2]
Identify two examples of capital goods that a farm could use.
(b)[4]
Explain how a country could 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 from which a farm could gain.
(d)[8]
Discuss whether developing countries benefit from producing mainly primary products, or whether they do not.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A tractor” …